Question

what is an index number? explain the main problems which are faced in the construction of index number of prices​

Answer 1

Answer:

Collection of data is the main problem in constructing index number, as there is a large variety of goods and prices. If the number of the commodities is too large, a choice of some representative items has to be made.

Answer 2

sᴇʟᴇᴄᴛɪᴏɴ ᴏғ ɪᴛᴇᴍs : ᴄᴏʟʟᴇᴄᴛɪᴏɴ ᴏғ ᴅᴀᴛᴀ ɪs ᴛʜᴇ ᴍᴀɪɴ ᴘʀᴏʙʟᴇᴍ ɪɴ ᴄᴏɴsᴛʀᴜᴄᴛɪɴɢ ɪɴᴅᴇx ɴᴜᴍʙᴇʀ, ᴀs ᴛʜᴇʀᴇ ɪs ᴀ ʟᴀʀɢᴇ ᴠᴀʀɪᴇᴛʏ ᴏғ ɢᴏᴏᴅs ᴀɴᴅ ᴘʀɪᴄᴇs. ɪғ ᴛʜᴇ ɴᴜᴍʙᴇʀ ᴏғ ᴛʜᴇ ᴄᴏᴍᴍᴏᴅɪᴛɪᴇs ɪs ᴛᴏᴏ ʟᴀʀɢᴇ, ᴀ ᴄʜᴏɪᴄᴇ ᴏғ sᴏᴍᴇ ʀᴇᴘʀᴇsᴇɴᴛᴀᴛɪᴠᴇ ɪᴛᴇᴍs ʜᴀs ᴛᴏ ʙᴇ ᴍᴀᴅᴇ.