Find index number using Chain base method
| Year | Price |
| Jan | 22 |
| Mar | 21.20 |
| May | 22 |
| Jul | 23 |
| Sep | 24.70 |
| Nov | 26 |
Solution:
1. Chain base method :
`"Index Number I"=("Price of current year")/("Price of preceding year") xx 100`
Price for the year Jan is not given here.
Hence, we will take the index number for Jan as 100.
| Year | Price | Chain base index number
`=("Price of current year")/("Price of preceding year") xx 100` |
| Jan | 22 | `22/22 xx 100=100` |
| Mar | 21.20 | `21.20/22 xx 100=96.36` |
| May | 22 | `22/21.20 xx 100=103.77` |
| Jul | 23 | `23/22 xx 100=104.55` |
| Sep | 24.70 | `24.70/23 xx 100=107.39` |
| Nov | 26 | `26/24.70 xx 100=105.26` |
This material is intended as a summary. Use your textbook for detail explanation.
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