Chapter 11 Index Number (Social Science Application Pakage)

1. Index number is a measurement used to show the average changes in a certain quality with time. An example of index number is price index.

2. Price index

I = P1/P0 X 100

P0 = the price of an item at base time
P1 = the price of the item at a specific time

3. Composite index number

(T) = (total)(I)(W) / (total)(W)

I = Index number
W = Weightage


Example :

1. In the year 2002, the price and price index of a kilogram of onions are RM 3.60 and 120
respectively. Using the year 2000 as the base year, calculate the of a kilogram of onions in the year 2000.

P(2000) / P(2002) X 100 = 120

RM 3.60 / P(2002) X 100 = 120

P(2002) = (RM 3.60 x 100) / 120

= RM 3.00