Discuss simple average of price relative method.
Answers 1
Explanation:
Simple Average of Price Relative Method: According to this method, price relatives are first obtained for each commodity and then the simple average of all the price relative is taken.
Price Relative (P01)=Current Year Price (P1)Base Year Price (P0)×100
We can find out price index number of the current year by using the following formula
P01=∑[P1P0×100]N
where, N = Number of goods, P1 = Current year's price, P0 = Base year's price
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