Weighted Average of Price Relatives Calculator
भारित मूल्यानुपात माध्य विधि कैलकुलेटर
Calculate Price Index using Weighted Average of Price Relatives Method with step-by-step solution
Custom Weights
Quantity Weights
Value Weights
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Weighted Average of Price Relatives Formula:
\[
P_{01} = \frac{\Sigma \left( \frac{P_1}{P_0} \times 100 \times W \right)}{\Sigma W}
\]
Price Index Calculation Result
Price Index (P₀₁)
0.00
Percentage Change
0.00%
Sum of Weighted Relatives
0.00
Sum of Weights
0.00
Interpretation:
Enter data and calculate to see interpretation
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Step 1: Data Preparation
Step 2: Calculate Price Relatives
Step 3: Calculate Weighted Relatives
Step 4: Apply Weighted Average Formula
Step 5: Interpretation
Weighted Average of Price Relatives Method: Complete Guide
भारित मूल्यानुपात माध्य विधि: पूरी मार्गदर्शिका
What is the Weighted Average of Price Relatives Method?
The Weighted Average of Price Relatives Method is an advanced statistical method used to calculate price index numbers. Unlike the simple average method, this method assigns different weights to different commodities based on their importance, quantity consumed, or value.
Mathematical Formula
The formula for Weighted Average of Price Relatives Method is:
\[
P_{01} = \frac{\Sigma \left( \frac{P_1}{P_0} \times 100 \times W \right)}{\Sigma W}
\]
Where:
- \( P_{01} \) = Price index number for current year with respect to base year
- \( P_1 \) = Price of commodity in current year
- \( P_0 \) = Price of commodity in base year
- \( W \) = Weight assigned to the commodity
- \( \Sigma \) = Summation symbol
Types of Weights Used
- Custom Weights: User-defined weights based on importance
- Quantity Weights: Weights based on quantities consumed or produced
- Value Weights: Weights based on value (Price × Quantity)
- Expenditure Weights: Weights based on household expenditure patterns
Advantages of This Method
- More accurate than simple average method
- Considers relative importance of different commodities
- Reflects actual consumption patterns
- Widely used in official price indices like CPI and WPI
- Can handle heterogeneous items effectively
Applications in Real Life
- Consumer Price Index (CPI) calculation
- Wholesale Price Index (WPI) calculation
- Inflation rate measurement
- Cost of living adjustments
- Business price analysis
Frequently Asked Questions
Why use weighted average instead of simple average?
Weighted average gives more importance to items that are consumed in larger quantities or have higher value, providing a more accurate representation of overall price changes.
How are weights determined?
Weights are determined based on consumption surveys, production data, expenditure patterns, or expert judgment depending on the purpose of the index.
What is the difference between Laspeyres and Paasche methods?
Laspeyres method uses base year weights, while Paasche method uses current year weights. Laspeyres is more commonly used for price indices.