Unweighted Average of Relatives Index

In case of unweighted average of relatives, price relative of each commodity is first calculated and then average (mean, median or geometric mean) of these price relatives for all the commodities is taken. average of relatives can be calculated by taking arithmetic mean, geometric mean or median as average. Therefore there is a slight difference between the formulas depending upon the type of average used. Different formulas for the calculation of unweighted average of relatives are given below.

 

 Unweighted Average of Relatives Index (Mean)

 

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Unweighted Average of Relatives Index (Median)

 

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Problem: Calculate price relatives or simple price index for the following data taking 1980 as base, using

  • Arithmetic Mean as average
  • Median as average
  • Geometric Mean as average

 

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Arithmetic Mean as average

unweighted average of relatives is calculated by using the formula of taking mean as average. This calculation is shown in the table given below.

 

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Median as average

Median of the arranged data having odd number of observations can be calculated by using the formula:

 

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The calculation of price relatives for taking median as average is given as:

 

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Geometric Mean as average

 

unweighted average of relatives is calculated by using the formula of taking geometric mean as average. This calculation is shown in the table given below.

 

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Summary of Results

 

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