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Index numbers are used to measure and compare changes in prices, quantities, and values over time. There are several types of index numbers including simple price indexes, quantity indexes, value indexes, and aggregate price indexes. Aggregate price indexes include unweighted, Laspeyres, Paasche, and fixed-weight indexes. The Consumer Price Index is a widely used fixed-weight aggregate price index published monthly by the Bureau of Labor Statistics to measure inflation experienced by urban consumers.
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Ch1 2 index number
There are different types of index numbers that can be used to measure how a variable changes over time. Weighted index numbers are more accurate than simple index numbers because they assign greater importance to items that see larger changes in price or quantity. Common types of weighted index numbers include Laspeyres, Paasche, and Fisher indexes. Calculating accurate index numbers can be challenging due to issues like incompatible data, inappropriate weighting factors, and improperly selected base years.
Types Of Index Numbers
Based On the types of Index Numbers.
Prepared By Siddhant Kumar Behera.
Ravenshaw University Student Of IMBA-FM.
I ndex no_stats
This document discusses index numbers and various methods for constructing them. It defines an index number as a measure of relative change from one period to another. There are different types of index numbers including simple and weighted indexes. Weighted indexes assign weights to items based on factors like quantities. Various methods for constructing weighted indexes are described, such as Laspeyre's method, Paasche's method, and Fisher's ideal method. The document also discusses tests like the time reversal test and factor reversal test to evaluate appropriate index number formulas.
Index number
This document discusses index numbers, which are statistical tools used to measure relative changes in variables such as prices or quantities over time. It defines index numbers and outlines their key features and types, including price, quantity, value, simple and composite index numbers. The document also describes several methods for constructing index numbers, such as Laspeyre's method, Paasche's method, Fisher's ideal method and consumer price indexes. Index numbers are expressed as percentages and measure the effect of changes over periods of time.
Index number
An index number measures relative changes in price, quantity, or value over time. It can help frame policies, reveal trends, and deflate values. Index numbers are classified by what they measure (price, quantity, value) and their construction method (simple, weighted aggregate, weighted average of price relatives). Common uses include analyzing purchasing power, incomes, and markets. Weighted indexes assign weights to items, with methods including Laspeyres, Paasche, Fisher, and Kelly. Consumer price indexes measure price changes in consumer baskets.
Index number
The document provides information on index numbers including:
1) Index numbers measure relative changes in variables like prices, quantities, or values over time by calculating the ratio of current to base values.
2) There are different types of index numbers such as price indexes, quantity indexes, and composite indexes. Methods for constructing indexes include simple aggregative, weighted aggregated, Laspeyres, Paasche, and Fisher's methods.
3) Index numbers have various uses including framing economic policies, revealing trends, and deflating monetary values. Problems in constructing indexes include choosing the base period, averages, commodities, and collecting data.
Class 11 Economics -Introduction to index numbers
INDEX NUMBERS
Economic activities have constant tendency to change. Prices of commodities which arc the total result of number of economic activities also have a tendency to fluctuate. The problem of change in prices is very important. But it is not very simple to study this problem and derive conclusions because price of different commodities change by different degrees. Hence, there is a great need for a device which can smoothen the irregularities in the prices to obtain a conclusion.
Our institute AMEND EDUCATION ACADEMY works in the direction to educate the students in the best possible way
Index numbers
This document discusses index numbers and basic statistics. It begins by defining index numbers as devices that measure changes in variables over time or space. It notes that index numbers are specialized averages. The document then discusses different types of index numbers, methods for constructing them, advantages and disadvantages, and problems related to index numbers. It provides examples of calculating Fisher's ideal index number. In the end, it lists some required readings and resources for further learning about index numbers and basic statistics.
Recommended
Ch1 2 index number
There are different types of index numbers that can be used to measure how a variable changes over time. Weighted index numbers are more accurate than simple index numbers because they assign greater importance to items that see larger changes in price or quantity. Common types of weighted index numbers include Laspeyres, Paasche, and Fisher indexes. Calculating accurate index numbers can be challenging due to issues like incompatible data, inappropriate weighting factors, and improperly selected base years.
Types Of Index Numbers
Based On the types of Index Numbers.
Prepared By Siddhant Kumar Behera.
Ravenshaw University Student Of IMBA-FM.
I ndex no_stats
This document discusses index numbers and various methods for constructing them. It defines an index number as a measure of relative change from one period to another. There are different types of index numbers including simple and weighted indexes. Weighted indexes assign weights to items based on factors like quantities. Various methods for constructing weighted indexes are described, such as Laspeyre's method, Paasche's method, and Fisher's ideal method. The document also discusses tests like the time reversal test and factor reversal test to evaluate appropriate index number formulas.
Index number
This document discusses index numbers, which are statistical tools used to measure relative changes in variables such as prices or quantities over time. It defines index numbers and outlines their key features and types, including price, quantity, value, simple and composite index numbers. The document also describes several methods for constructing index numbers, such as Laspeyre's method, Paasche's method, Fisher's ideal method and consumer price indexes. Index numbers are expressed as percentages and measure the effect of changes over periods of time.
Index number
An index number measures relative changes in price, quantity, or value over time. It can help frame policies, reveal trends, and deflate values. Index numbers are classified by what they measure (price, quantity, value) and their construction method (simple, weighted aggregate, weighted average of price relatives). Common uses include analyzing purchasing power, incomes, and markets. Weighted indexes assign weights to items, with methods including Laspeyres, Paasche, Fisher, and Kelly. Consumer price indexes measure price changes in consumer baskets.
Index number
The document provides information on index numbers including:
1) Index numbers measure relative changes in variables like prices, quantities, or values over time by calculating the ratio of current to base values.
2) There are different types of index numbers such as price indexes, quantity indexes, and composite indexes. Methods for constructing indexes include simple aggregative, weighted aggregated, Laspeyres, Paasche, and Fisher's methods.
3) Index numbers have various uses including framing economic policies, revealing trends, and deflating monetary values. Problems in constructing indexes include choosing the base period, averages, commodities, and collecting data.
Class 11 Economics -Introduction to index numbers
INDEX NUMBERS
Economic activities have constant tendency to change. Prices of commodities which arc the total result of number of economic activities also have a tendency to fluctuate. The problem of change in prices is very important. But it is not very simple to study this problem and derive conclusions because price of different commodities change by different degrees. Hence, there is a great need for a device which can smoothen the irregularities in the prices to obtain a conclusion.
Our institute AMEND EDUCATION ACADEMY works in the direction to educate the students in the best possible way
Index numbers
This document discusses index numbers and basic statistics. It begins by defining index numbers as devices that measure changes in variables over time or space. It notes that index numbers are specialized averages. The document then discusses different types of index numbers, methods for constructing them, advantages and disadvantages, and problems related to index numbers. It provides examples of calculating Fisher's ideal index number. In the end, it lists some required readings and resources for further learning about index numbers and basic statistics.
Weighted index numbers
The document provides examples of calculating different types of weighted index numbers to measure changes in prices over time. It discusses weighted aggregative price index numbers, which calculate total expenditures for a current and base year using item weights. It also describes weighted average of relative price index numbers. Specific methods covered include Laspeyre's index, Paasche's index, Fisher's ideal index, and Marshall-Edgeworth price index. Formulas and examples are given for calculating each type of index number from sample price and quantity data for multiple time periods.
Chapter 20
This document discusses index numbers, which are statistical values that measure changes in variables like price or quantity over time. It covers simple index numbers calculated for a single item, composite index numbers for multiple items, and weighted index numbers that account for quantities. The most commonly used index in Australia is the Consumer Price Index (CPI), which measures price changes in a fixed basket of consumer goods and services to indicate inflation and cost of living changes. The document provides formulas and explanations for simple, composite, weighted (Laspeyres, Paasche), and Fisher's ideal indexes.
Index numbers
This document provides an overview of index numbers, including their meaning, features, advantages, limitations, construction methods, and examples of important index numbers. Index numbers are statistical measures used to compare economic variables, like prices or production, over time. They show percentage changes from a base period and are widely used by governments, businesses, and economists to understand inflation trends and formulate policies. The document discusses various methods for constructing index numbers, such as Laspeyre's method, Paasche's method, and Fisher's method which involve assigning weights. Important commonly used index numbers mentioned include the Consumer Price Index, Sensex, Agricultural Production Index, and Wholesale Price Index.
Index Number
- Index numbers measure relative changes in variables like prices, quantities, values over time from a base period. They are used to frame policies, reveal trends, and for deflating purposes.
- There are different methods for constructing index numbers, including simple aggregate methods, simple average of relatives methods, and weighted index numbers that assign weights.
- Common weighted indexes include the Laspeyres method which uses base period weights, the Paasche method which uses current period weights, and the Fisher Ideal Index which takes the geometric mean of the Laspeyres and Paasche.
Index Number (Business Statistics Tutorial )
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Mahmudul Hasan Nakib
Founder President (Inventive Point)
BBA , MBA (Finance), AUB, SEU
CMA, ICMAB(Studying)
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Here are the calculations for the indexes requested:
1. Simple quantity index for meat in 2008 with 2006 as base year
Qn = 700
Q0 = 600
Index = Qn/Q0 * 100 = 700/600 * 100 = 116.67
2. Simple composite price index for 2007 with 2006 as base year
ΣPn/ΣP0 * 100 = (6.6 + 46 + 7.3 + 30.4)/(7 + 44 + 7 + 30.4) * 100 = 103.57
3. Laspeyres price index for 2008 with 2007 as base year
ΣPnQ0/ΣP0Q0 * 100 = (8.4
Index number
An index number measures relative changes in price, quantity, or other variables over time or between locations. It expresses these changes as percentages. There are several types of index numbers including price, quantity, and value indexes. Index numbers can be constructed using simple aggregate, simple average of price relatives, or weighted methods. Weighted indexes assign weights to items based on quantities in the base or current period. Common weighted indexes include Laspeyres, Paasche, Fisher ideal, and chain indexes. Index numbers are used to track inflation or deflation, reveal economic trends, and help formulate government policies.
Index Numbers
This document discusses various types of index numbers used to measure changes in economic variables over time. It defines an index number as a quantitative measure of the growth of prices, production, or other quantities of economic interest from one period to another. The document then describes different characteristics, uses, problems, classifications, and methods for constructing index numbers, including simple aggregative methods, weighted aggregative methods like Laspeyres and Paasche, and chain index numbers. It provides examples to illustrate how to calculate different index numbers.
Presentation on Index Number
This document discusses different types of index numbers used in business statistics. It provides classifications of index numbers including unweighted index numbers, weighted index numbers, simple index numbers, Paasche's Price Index, Fisher Ideal Index, and Laspeyre's Price Index. Unweighted index numbers give equal weight to each stock, while weighted indexes weight stocks based on their market capitalizations. Fisher's Ideal Index Number is defined as the geometric mean of the Laspeyre's and Paasche's index numbers, and is considered ideal as it satisfies tests of time reversal and factor reversal.
Lect8 Jan
Index numbers are used to summarize many variables or numbers with one number. Common index numbers include price indexes like the Consumer Price Index and Producer Price Index which measure inflation. Price indexes weight prices by quantities to account for items that are more or less important. The Laspeyres index uses base year quantities as weights while the Paasche index uses current year quantities as weights, with both commonly used in CPI and PPI calculations. Index numbers can then be used to deflate time series data to remove the effects of price changes.
Weighted index number - business statistics
Special For Jaipur national university Student || BBA || Weighted Index Number || Business Statics || Presentation
20140613 JKE 316E_extra topic on Index Numbers
What is the uses of index numbers?
What is the differences between Paasche and Laspeyres Index?
What is the differences between price index and quantity index?
Index number
Index numbers were originally developed to measure changes in price levels and are used as economic barometers. There are different types of index numbers including price indexes that measure wholesale, retail, and cost of living prices, and quantity indexes that track production quantities over time. Special purpose indexes also exist for areas like imports/exports. Index numbers are important for policymaking, studying economic trends, measuring inflation, adjusting national income statistics, and helping various social scientists. However, they have limitations such as being based on samples, potential data biases, misuse, changes in economies over time, and arbitrary assigned weights.
Index Number
Definition- Problems for construction. Construction of price, quantity, value and cost of living index numbers, ideal index, tests and uses of index numbers.
Index number
This document discusses various types of index numbers used to measure changes in economic variables over time. It defines index numbers and describes their key characteristics and uses. It also covers different classification and construction methods of index numbers, including simple, weighted, value and chain index numbers. Examples are provided to illustrate the calculation of Laspeyres, Paasche, Fisher ideal and chain index numbers.
Index number
This document provides an introduction to index numbers and their uses and characteristics. It defines an index number as a method to measure changes in price levels over time, typically expressed as a percentage. Index numbers are specialized averages that measure changes in phenomena over periods of time and allow comparisons of prices, quantities, and values between different years by relating them to a base year. The document then discusses various methods for calculating index numbers, including fixed base methods, chain base methods, weighted index numbers using Laspeyres, Paaschee and Fisher's ideal formulas, and the Marshall-Edgeworth method.
Business statistics (Basic concepts of Index Numbers)
Index numbers are used to measure percentage changes in economic variables like prices, production, and exports over time. They show changes relative to a base time period or location. There are different types of index numbers including price, quantity, and value indexes. A price index measures changes in prices over time by taking the price of commodities in the current year and expressing them as a percentage of prices in the base year.
Index numbers( simple index number by fixed base method )
The document discusses index numbers which measure changes in variables over time. It defines simple and composite index numbers. The three main types of index numbers are price, quantity, and value indexes. Examples are provided to demonstrate calculating price indexes using the fixed base method. Index numbers are calculated for different years using different base periods to compare price changes.
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Unit 4 -
Basic concept of index numbers – simple and weighted index numbers – concept of weights - types of index numbers – Business index number – CPT, WPI, Sensex, Niffy, Production Index, Time series – variations in Time Series for business forecasting.
Chap015
This document provides an overview of index numbers and how to compute different types of indexes. It defines an index number as a number that measures relative change from one time period to another in items like price, quantity, or value. It describes simple, unweighted indexes and weighted indexes like the Laspeyres and Paasche indexes. It provides examples of how to calculate and interpret simple indexes, Laspeyres indexes, Paasche indexes, Fisher's ideal index, and value indexes. The learning objectives cover computing and interpreting these different index types.
Assignment
The Producer Price Index (PPI) measures the average change in selling prices received by domestic producers for their output. The PPI publishes over 600 industry price indexes and over 2,000 commodity price indexes. It differs from the Consumer Price Index in that it excludes services and uses prices received by producers rather than consumer expenditures. The March 2010 PPI report showed a 0.7% rise in finished goods and increases of 0.6% for intermediate goods and 3.2% for crude goods.
Index numbers
This document discusses problems in constructing and using index numbers. It addresses several key issues: [1] the purpose of the index must be clearly defined; [2] the base period should be normal and not too distant in the past, and a decision must be made whether to use a fixed or chain base; [3] appropriate weights must be assigned to items to reflect their relative importance. Issues in using indexes include generalizing from a specific index, lack of transparency, effects of time spans, and inability to account for quality changes.
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Weighted index numbers
The document provides examples of calculating different types of weighted index numbers to measure changes in prices over time. It discusses weighted aggregative price index numbers, which calculate total expenditures for a current and base year using item weights. It also describes weighted average of relative price index numbers. Specific methods covered include Laspeyre's index, Paasche's index, Fisher's ideal index, and Marshall-Edgeworth price index. Formulas and examples are given for calculating each type of index number from sample price and quantity data for multiple time periods.
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This document discusses index numbers, which are statistical values that measure changes in variables like price or quantity over time. It covers simple index numbers calculated for a single item, composite index numbers for multiple items, and weighted index numbers that account for quantities. The most commonly used index in Australia is the Consumer Price Index (CPI), which measures price changes in a fixed basket of consumer goods and services to indicate inflation and cost of living changes. The document provides formulas and explanations for simple, composite, weighted (Laspeyres, Paasche), and Fisher's ideal indexes.
Index numbers
This document provides an overview of index numbers, including their meaning, features, advantages, limitations, construction methods, and examples of important index numbers. Index numbers are statistical measures used to compare economic variables, like prices or production, over time. They show percentage changes from a base period and are widely used by governments, businesses, and economists to understand inflation trends and formulate policies. The document discusses various methods for constructing index numbers, such as Laspeyre's method, Paasche's method, and Fisher's method which involve assigning weights. Important commonly used index numbers mentioned include the Consumer Price Index, Sensex, Agricultural Production Index, and Wholesale Price Index.
Index Number
- Index numbers measure relative changes in variables like prices, quantities, values over time from a base period. They are used to frame policies, reveal trends, and for deflating purposes.
- There are different methods for constructing index numbers, including simple aggregate methods, simple average of relatives methods, and weighted index numbers that assign weights.
- Common weighted indexes include the Laspeyres method which uses base period weights, the Paasche method which uses current period weights, and the Fisher Ideal Index which takes the geometric mean of the Laspeyres and Paasche.
Index Number (Business Statistics Tutorial )
Business Statistics Tutorial
Mahmudul Hasan Nakib
Founder President (Inventive Point)
BBA , MBA (Finance), AUB, SEU
CMA, ICMAB(Studying)
Statistics lecture 12 (chapter 12)
Here are the calculations for the indexes requested:
1. Simple quantity index for meat in 2008 with 2006 as base year
Qn = 700
Q0 = 600
Index = Qn/Q0 * 100 = 700/600 * 100 = 116.67
2. Simple composite price index for 2007 with 2006 as base year
ΣPn/ΣP0 * 100 = (6.6 + 46 + 7.3 + 30.4)/(7 + 44 + 7 + 30.4) * 100 = 103.57
3. Laspeyres price index for 2008 with 2007 as base year
ΣPnQ0/ΣP0Q0 * 100 = (8.4
Index number
An index number measures relative changes in price, quantity, or other variables over time or between locations. It expresses these changes as percentages. There are several types of index numbers including price, quantity, and value indexes. Index numbers can be constructed using simple aggregate, simple average of price relatives, or weighted methods. Weighted indexes assign weights to items based on quantities in the base or current period. Common weighted indexes include Laspeyres, Paasche, Fisher ideal, and chain indexes. Index numbers are used to track inflation or deflation, reveal economic trends, and help formulate government policies.
Index Numbers
This document discusses various types of index numbers used to measure changes in economic variables over time. It defines an index number as a quantitative measure of the growth of prices, production, or other quantities of economic interest from one period to another. The document then describes different characteristics, uses, problems, classifications, and methods for constructing index numbers, including simple aggregative methods, weighted aggregative methods like Laspeyres and Paasche, and chain index numbers. It provides examples to illustrate how to calculate different index numbers.
Presentation on Index Number
This document discusses different types of index numbers used in business statistics. It provides classifications of index numbers including unweighted index numbers, weighted index numbers, simple index numbers, Paasche's Price Index, Fisher Ideal Index, and Laspeyre's Price Index. Unweighted index numbers give equal weight to each stock, while weighted indexes weight stocks based on their market capitalizations. Fisher's Ideal Index Number is defined as the geometric mean of the Laspeyre's and Paasche's index numbers, and is considered ideal as it satisfies tests of time reversal and factor reversal.
Lect8 Jan
Index numbers are used to summarize many variables or numbers with one number. Common index numbers include price indexes like the Consumer Price Index and Producer Price Index which measure inflation. Price indexes weight prices by quantities to account for items that are more or less important. The Laspeyres index uses base year quantities as weights while the Paasche index uses current year quantities as weights, with both commonly used in CPI and PPI calculations. Index numbers can then be used to deflate time series data to remove the effects of price changes.
Weighted index number - business statistics
Special For Jaipur national university Student || BBA || Weighted Index Number || Business Statics || Presentation
20140613 JKE 316E_extra topic on Index Numbers
What is the uses of index numbers?
What is the differences between Paasche and Laspeyres Index?
What is the differences between price index and quantity index?
Index number
Index numbers were originally developed to measure changes in price levels and are used as economic barometers. There are different types of index numbers including price indexes that measure wholesale, retail, and cost of living prices, and quantity indexes that track production quantities over time. Special purpose indexes also exist for areas like imports/exports. Index numbers are important for policymaking, studying economic trends, measuring inflation, adjusting national income statistics, and helping various social scientists. However, they have limitations such as being based on samples, potential data biases, misuse, changes in economies over time, and arbitrary assigned weights.
Index Number
Definition- Problems for construction. Construction of price, quantity, value and cost of living index numbers, ideal index, tests and uses of index numbers.
Index number
This document discusses various types of index numbers used to measure changes in economic variables over time. It defines index numbers and describes their key characteristics and uses. It also covers different classification and construction methods of index numbers, including simple, weighted, value and chain index numbers. Examples are provided to illustrate the calculation of Laspeyres, Paasche, Fisher ideal and chain index numbers.
Index number
This document provides an introduction to index numbers and their uses and characteristics. It defines an index number as a method to measure changes in price levels over time, typically expressed as a percentage. Index numbers are specialized averages that measure changes in phenomena over periods of time and allow comparisons of prices, quantities, and values between different years by relating them to a base year. The document then discusses various methods for calculating index numbers, including fixed base methods, chain base methods, weighted index numbers using Laspeyres, Paaschee and Fisher's ideal formulas, and the Marshall-Edgeworth method.
Business statistics (Basic concepts of Index Numbers)
Index numbers are used to measure percentage changes in economic variables like prices, production, and exports over time. They show changes relative to a base time period or location. There are different types of index numbers including price, quantity, and value indexes. A price index measures changes in prices over time by taking the price of commodities in the current year and expressing them as a percentage of prices in the base year.
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The document discusses index numbers which measure changes in variables over time. It defines simple and composite index numbers. The three main types of index numbers are price, quantity, and value indexes. Examples are provided to demonstrate calculating price indexes using the fixed base method. Index numbers are calculated for different years using different base periods to compare price changes.
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Unit 4 -
Basic concept of index numbers – simple and weighted index numbers – concept of weights - types of index numbers – Business index number – CPT, WPI, Sensex, Niffy, Production Index, Time series – variations in Time Series for business forecasting.
Chap015
This document provides an overview of index numbers and how to compute different types of indexes. It defines an index number as a number that measures relative change from one time period to another in items like price, quantity, or value. It describes simple, unweighted indexes and weighted indexes like the Laspeyres and Paasche indexes. It provides examples of how to calculate and interpret simple indexes, Laspeyres indexes, Paasche indexes, Fisher's ideal index, and value indexes. The learning objectives cover computing and interpreting these different index types.
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Business statistics (Basic concepts of Index Numbers)
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Assignment
The Producer Price Index (PPI) measures the average change in selling prices received by domestic producers for their output. The PPI publishes over 600 industry price indexes and over 2,000 commodity price indexes. It differs from the Consumer Price Index in that it excludes services and uses prices received by producers rather than consumer expenditures. The March 2010 PPI report showed a 0.7% rise in finished goods and increases of 0.6% for intermediate goods and 3.2% for crude goods.
Index numbers
This document discusses problems in constructing and using index numbers. It addresses several key issues: [1] the purpose of the index must be clearly defined; [2] the base period should be normal and not too distant in the past, and a decision must be made whether to use a fixed or chain base; [3] appropriate weights must be assigned to items to reflect their relative importance. Issues in using indexes include generalizing from a specific index, lack of transparency, effects of time spans, and inability to account for quality changes.
Price Index | Eonomics
The regularized average of the value of relatives for an allocated class of goods or services in a specific region, during a mentioned period of time is called Price Index. This is statistically designed which can help to relate how the rates of relatives, considered to be a complete, varies from time frame or location to location. Copy the link given below and paste it in new browser window to get more information on Price Index:- http://www.transtutors.com/homework-help/economics/price-index.aspx
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Index numbers are used to compare economic data over time by expressing it relative to a base value. An index number assigns a value of 100 to the base period or item and expresses other values as a percentage of the base. For example, the UK house price index of 162.9 in 2011 means house prices were 162.9% of the 2007 base value of 100. Index numbers do not have units and are commonly used to track inflation, exchange rates, stock markets, production and other economic indicators.
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Name Shakeel Nouman
Religion Christian
Domicile Punjab (Lahore)
Contact # 0332-4462527. 0321-9898767
E.Mail sn_gcu@yahoo.com
sn_gcu@hotmail.com
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This document discusses index numbers, which are ratios or averages expressed as percentages that assign a single number to represent trends across multiple statistics over time. Index numbers allow comparisons between two or more time periods by using one as a base period for standard comparison. They are specialized averages that measure relative changes from one time or place to another. Constructing index numbers involves selecting data and items, choosing base periods and weights, and selecting an appropriate formula. Index numbers are useful for policymaking, market analysis, and measuring quantitative changes, but have limitations such as sampling errors and unreliable long-term comparisons. The document also covers types of index numbers and various methods for their construction.
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Chapter 11 index number
This document discusses index numbers and how to calculate price indexes, composite indexes, and uses examples to demonstrate these calculations. It provides information on how price indexes track price changes over time for individual items and how composite indexes track changes in the overall cost of multiple items using price indexes and weightings. Formulas and steps are given for calculating price indexes, composite indexes, and using them to find item prices or total costs in different years. Exercises provide additional practice calculating various index numbers.
Revision workshop 17 january 2013
The document discusses organizing quantitative data into a frequency distribution table. It provides an example of telephone call data organized into classes with frequencies. The key steps are determining the number of classes, class width, and populating the frequency table with counts in each class. Finally, the frequency distribution can be represented graphically through histograms, frequency polygons, and ogives.
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Index numbers99
- 2. Definition of Index Number A summary measure that states a relative comparison between groups of related items Price Relative or Percentage Relative A Number used to measure how much somthing has changed from one time period to another
- 3. Simple Price Relative Index An index which describes a single item or commodity in a given period versus the base period
- 5. Example of Simple Price Index Suppose the price of one pound of a certain brand of coffee was $2.00 in 1990, $3.22 in 1995 and $6.04 in 1997. What are the price indicies of the three figures, with 1990 as the base (written, 1990 = 100)?
- 6. 1990 1995 1997 ( ) $2. $2. 00 00 100 100 = ( ) $3. $2. 22 00 100 161 = ( ) $6. $2. 04 00 100 302 = PRICE INDICES YEAR (1990 = 100) $2.00 $3.22 $6.04 $2.00 $3.22 $6.04 I p p = n o
- 8. Value Index I PQ PQ = ×100n n oo V
- 9. Unweighted Aggregate Price Index (Summarizes a groups of items or commodities) I P P = × ∑ ∑ 100 n o
- 10. Price Commodity 1995(po) 1997(pn) Milk (pint) 19.6 21.4 Round Steak(lb) 188.5 189.5 Flour,wheat (lb) 19.9 16.9 Eggs, GradeA large (dozen) 77.0 81.5 305.0 309.3 Unweighted Aggregate Price Index: Unweighted Aggregate Price Index: I p p = × ∑ ∑ 100n o 101 0.305 3.309 100 0.779.195.1886.19 5.819.165.1894.21 ==× +++ +++ =I
- 11. Price Commodity 1995(po) 1997(pn) Milk (pint) 19.6 21.4 Round Steak(lb) 188.5 189.5 Flour,wheat (lb) 19.9 16.9 Eggs, GradeA large (dozen) 77.0 81.5 305.0 309.3 156.8 171.2quart 442.2 459.1 Unweighted Aggregate Price Index: Unweighted Aggregate Price Index: I p p = × ∑ ∑ 100n o 16.134100 0.779.195.888.156 5.819.165.1892.171 =× +++ +++ =I 101=134.16 .
- 12. Dow Jones Industrial Average (DJIA) Divisor P DJIA n n∑= = 30 1 Where: Pn = the price of stock n Divisor = the special DJIA divisor
- 13. Unweighted Average of Price Relatives Index I P P k = ×∑ 100 n o
- 14. Price Commodity 1995(po) 1997(pn) pn/po Milk (quart) 156.8 171.2 1.09 Round Steak(lb) 188.5 189.5 1.01 Flour,wheat (lb) 19.9 16.9 0.85 Eggs, GradeA large (dozen) 77.0 81.5 1.06 305.0 309.3 4.01 I P P k = ×∑ 100n o I = + + + × = = ( . . . . ) . ( ) . 109 101 085 106 100 4 4 01 100 4 100 25
- 15. Weighted Aggregate Price Index Takes prices and quantities (weights) into consideration Laspeyres Index Paasche Index Fixed-Weight AggregatePrice Index
- 16. Laspeyres Index Quantities are from the base period Reflects changes in prices alone Tends to overestimate price Ignores changes in consumption Easiest to calculate Consumer Price Index-modified
- 17. Laspeyres Index I P Q P Q = × × × ∑ ∑ 100 n o o o
- 18. 1990 1996 p90 q90 p96 q96 Refrigerator 335 2 444 12 Range 425 3 588 18 Toaster 18 22 25 58 TV 390 12 440 29 Laspeyres Index= I P Q P Q = × × × ∑ ∑ 10096 90 9090 p96q90 888 1764 550 5280 8482 p90q90 670 1275 396 4680 7021 8.120100 7021 8482 =×=I
- 19. Paasche Index Quantities are from the given period Reflects changes in production or consumption Tend to underestimate price change Weights have to be revised each time period Can be costly and time consuming
- 20. Paasche Index I P Q P Q = × × × ∑ ∑ 100 n n o n
- 21. 1990 1996 p90 q90 p96 q96 Refrigerator 335 2 444 12 Range 425 3 588 18 Toaster 18 22 25 58 TV 390 12 440 29 I P Q P Q = × × × ∑ ∑ 100Paasche Index= 96 96 9690 p96q96 5328 10584 1450 12760 30122 p90q96 4020 7650 1044 11310 24024 I = × = 30122 24024 100 125 4.
- 22. Fixed-Weight Aggregate Price Index Weights are from one or more representative periods Bureau of Labor Statistics revises weights every 10 years Producer Price Index Government agencies indicies are publishes in series (impractical to use Paasche)
- 23. Fixed-Weight Aggregate Price Index I P Q P Q = × × × ∑ ∑ 100n a ao
- 24. Weighted Arithmetic Mean of Price Relatives Index Where w = paqa ∑ ∑ ×× = w P P w I 100))(( n o
- 25. Standard and Poor’s (S&P) 500 Index 10 .. & 500 1 = ∑= VO PN PS i ii Where: O.V. = original valuation in 1941- 43 Ni = number of shares outstanding for Firm I Pi = price of shares for Firm i
- 26. Consumer Price Index Fixed-weight aggregate price index (modified Laspeyres)
- 27. Consumer Price Index Measures average changes in prices of a fixed “market basket”of goods and services usually bought by urban wage earners and clerical workers from one time period to another Published monthly by Bureau of Labor Statistics 400 goods and services
- 28. Uses of CPI Economic Indicator Escalator Deflator for real wages Process called deflating money wages Price index - deflator Deflated dollar value = constant dollar
- 29. Real Wages CPI1987 = 100 Real Wages98 = Current Wage98 Consumer Price Index98 X 100 100 6.113 853,30$ 33.159,27$ ∗=
- 30. Purchasing Power of Dollar $.82 = 1 122 X 100 $ = 1 CPI X 100 $0.18 decrease in purchasing power of $
- 31. % age Increase or Decrease Current Wage - Past Wage Past Wage X 100 30000 - 20000 20000 X 100 = 50%
- 32. Median Family Income CPI1987=100 Real Income 1990 1998 $20,000 $30,000 105.5 130.5 $18,957.35 $22,988.51 50% increase 23.7% increase 21.3% increase