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More Complex Indices
Example 6.2a: Simple aggregative (unweighted) index
Suppose an ice cream shop sells five varieties
of ice cream with prices of a 2-litre tub as shown in this table.
The owner is looking for a quick, simple index which will reflect
the different types of price changes over the whole range of
ice creams.
As you see, some have increased in price (by varying amounts),
some have decreased, and one has remained the same. So we are
looking for an index which will try to take these differences
into account. |
| Type
of Ice Cream |
July 1993 |
July 1994 |
| Plain Vanilla |
£2.10 |
£2.10 |
| Harlequin |
£2.85 |
£3.05 |
| Caribbean Fancy |
£3.45 |
£3.90 |
| Choconut |
£2.65 |
£2.60 |
| Mint 'n' Mango |
£2.90 |
£3.20 |
The general formula for this type of index is
The å sign means 'the sum of'. So the
formula is telling us to add up all the pn values,
add up all the p0 values, divide the first answer
by the second, and then multiply by 100. |
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