Compute a simple average of relatives' price indices using A. M and Median

 

Simple Average of Relatives' Price Indices

Question

Given the prices of three commodities, Using 1990 as the base period, compute, a simple average of relatives' price indices using

1. A.M
2. Median

Year	Prices
	A	B	C
1990	30.00	12.00	20.00
1991	35.50	13.50	23.50
1992	32.50	14.50	25.00
1993	32.50	14.00	25.00

 

Solutions:

 

Price Relatives

Year	Price Relatives
	A	B	C
1990	(30.00/30.00)*100= 100	(12.00/12.00)*100	(20.00/20.00)*100=100
1991	(35.50/30.00)*100=101.6	(13.50/12.00)*100 = 112.5	(23.50/20.00)*100=117.5
1992	(32.50/30.00)*100=108.3	(14.50/12.00)*100 = 120.8	(25.00/20.00)*100=125
1993	(32.50/30.00)*100=108.3	(14.00/12.00)*100=116.6	(25.00/20.00)*100=125

 

Now A.M and Median

 

                   A.M = `\frac{Sum of all observations}{Total number of Observations}`

     

    

Year	Price Relatives			Total	A.M	Median
	A	B	C
1990	100	100	100	300	300/3=100	100
1991	101.6	112.5	117.5	331.6	331/3=110.53	112.5
1992	108.3	120.8	125	354.1	354.1/3=118.03	120.8
1993	108.3	116.6	125	349.9	349.9/3=116.63	116.6