A weighted index number is generally preferred to an unweighted index number. Why?

Open in App

Solution

A weighted index number is preferred to an unweighted index number because:

(i) It gives different weights to different items as per their importance.

(ii) Results obtained using weighted index number are more reliable.

(iii) It is more accurate and useful.

Suggest Corrections

Similar questions

Q. Construct the Index Number for 2011 with 2015 as base from the following prices of commodities by simple (Unweighted) aggregative method.

Commodities	:	A	B	C	D	E
Prices in ₹(2015)	:	50	40	10	5	2
Prices in ₹(2011)	:	80	60	20	10	6

[Index Number = 164.48]

An index number which accounts for the relative importance of the items is known as

(i) weighted index

(ii) simple aggregative index

(iii) simple average of relatives

Why do we need an index number?

Laspeyres' method is generally preferred over Paasche’s method because Laspeyres' method involves collecting data for just one year which is the base year whereas Paasche’s requires collecting data for every year the index number is required.

An ideal index number would be one which takes into account as weights ______.

Join BYJU'S Learning Program

A weighted index number is generally preferred to an unweighted index number. Why?

A weighted index number is preferred to an unweighted index number because: (i) It gives different weights to different items as per their importance. (ii) Results obtained using weighted index number are more reliable. (iii) It is more accurate and useful.

A weighted index number is preferred to an unweighted index number because:

(i) It gives different weights to different items as per their importance.

(ii) Results obtained using weighted index number are more reliable.

(iii) It is more accurate and useful.