Paper 4: Fundamentals of Business Mathematics & Statistic

FUNDAMENTALS OF BUSINESS MATHEMATICS AND STATISTICS I 7.13

• Fisher ‘ideal’ Method

= Σ × Σ ×

Σ Σ

01 1 0 1 1

0 0 0 1

Q q p q pq p q p 100

• Marshall-Edgeworth Method

Σ^ +^

(^)
= + ×
Σ (^)
1 1 2
(^0112)
0

Q^2100

2

q p p

q p p

— Kelly’s Method

= Σ ×

Σ

01 1

0

Q q pq p 100

Weighted Index : Weighted Average of Relative Method

• When Arithmetic Mean is used for averaging

= Σ

(^01) Σ

Q QV

V

where Q =^10
q
q x 100 & V = q^0 p^0

• When Geometric Mean is used for averaging

= ( × )

(^01) Σ
Q antiloglog Q V
V
7.5 VALUE INDEX NUMBER
The value of a commodity is the product of its price and quantity. Thus the value of index is the sum of the
values of a given period (Σp 1 q 1 ) the base period (Σp 0 q 0 ) The formula is :
= Σ ×
Σ
01 1 1
0 0
V p qpq 100
Note: The weights are not to be applied in this case as they are interest in the value figures.
7.6 CONSUMER PRICE INDEX
The consumer price index measures the amount of money which consumer of a particular class have to
pay to get a basket of goods & services at a particular point of time in comparison to what they paid for
the same in the base period.
Different classes of people consume different types of commodities & even that same type of commodities
are not consumed in the same proportion by different classes of people (for e.g. higher class, middle class,
lower class). The general indices do not highlight the effects of change in prices of a various commodities
consumed by different classes of people on their cost of living.