Find index number using Simple Average of Price Relative Method (using the arithmetic mean)
| Item | Price
`p_0` | Price
`p_1` |
| Bread | 25 | 28 |
| Eggs | 30 | 35 |
| Ghee | 375 | 380 |
| Milk | 36 | 40 |
| Cheese | 440 | 500 |
| Butter | 265 | 300 |
Solution:| Item | Price
`p_0` | Price
`p_1` | Price relative
`P=p_1/p_0 xx 100` |
| Bread | 25 | 28 | `28/25 xx 100=112` |
| Eggs | 30 | 35 | `35/30 xx 100=116.67` |
| Ghee | 375 | 380 | `380/375 xx 100=101.33` |
| Milk | 36 | 40 | `40/36 xx 100=111.11` |
| Cheese | 440 | 500 | `500/440 xx 100=113.64` |
| Butter | 265 | 300 | `300/265 xx 100=113.21` |
| --- | --- | --- | --- |
| Total | `sum p_0=1171` | `sum p_1=1283` | `sum P=667.96` |
1. Average of price relative method (using the arithmetic mean) :`I=1/n(sum P)`
`=1/6(667.96)`
`=111.33`
Thus, there is a rise of `(111.33-100)=11.33%` in prices
This material is intended as a summary. Use your textbook for detail explanation.
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