index number in statistics

2. INDEX NUMBERS
Presented To:
Professor Farhan Ahmed
Presented By
Waqas Hussain
Roll No 04
Class BBA 3rd

3. Contents
 Introduction
 Definition
 Types
 Methods
 Characteristics
 Uses
 Selection Of The Base Period
 Selection Of Average

4. INTRODUCTION
 An index number measures the relative change in price,
quantity, value, or some other item of interest from
one time period to another.
 A simple index number measures the relative change in
one or more than one variable.

5. WHAT IS AN INDEX NUMBER

6. DEFINITION
 “Index numbers are quantitative measures of
growth of prices, production, inventory and
other quantities of economic interest.”

-Ronold

7. TYPES OF INDEX NUMBERS

8. CHARACTERISTICS OF INDEX NUMBERS
 Index numbers are specialised averages.
 Index numbers measures the net change in a group of
related variables:
 Index numbers measure the effect of changes over a
period of time.

9. USES OF INDEX NUMBERS
o To framing suitable policies.
o They reveal trends and tendencies.
o Index numbers are very useful in deflating.

10. METHODS OF CONSTRUCTING INDEX
NUMBERS

11. Selection Of Base Period
A period from which the changes are measured.
Two method of selecting base period
Fixed Base Method
Chain Base Method

12. Selection of Average
Since index numbers are specialized averages, a choice of
average to be used in their construction is of great
importance. Usually the following averages are used.
A.M
G.M
Median
Among these averages G.M is the appropriate average to be
used. But in practice G.M is not used as often as A.M
because of its computational difficulties.