Question

What is the formula for finding Index number by simple average of price relatives
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Answer 1

In this method, average of price relative of commodity is calculated. Find price relative for each commodity for the current year using the formula R = (P1 / P0) × 100. Add all price relatives of all the commodities. Divide sum obtained in step 2 by the number of commodities (N).

Answer 2

Answer:

1] Simple Average or Price Relatives Method

Price relative refers to the percentage ratio of the value of a variable in the current year to its value in the year chosen as the base. Here, N= Number of goods and P= Index number