Simple Aggregate Price Index

The method in which sum of prices of all the commodities in the current period is divided by the total prices in the base period is called unweighted aggregate index. Since simple aggregate index does not give relative importance to the commodities therefore it is neither meaningful nor representative index. The formula for calculating a simple aggregate price index is given below.

 

 

Problem: Calculate price index using simple aggregate method taking

  • 1975 as base year
  • Chain base method

 

 

Solution:

 

1975 as base year

 

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