The best average for the construction of index number is
Answers
The two important averages are the arithmetic mean and geometric mean. The arithmetic mean is the simpler of the two. But geometric mean is more accurate. However, the average prices should be reduced to price relatives (percentages) either on the basis of the fixed base method or the chain base method.
The best average for the construction of index number
Explanation:
The best average for construction of index number is Geometric mean. Index number is a statistical tool that helps in measuring change in data over a period of time. it may be change in price of commodity, quantity etc. Geometric mean is better than arithmetic mean for calculation of index number because it the calculated by taking Nth root of the multiplied values and hence is a better representative of the data.on the other hand arithmetic average is simply calculated by finding sum of the observation and then dividing it by total number of observation.
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The best average for the construction of index number
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