Question

Distinguish between :

Simple Index Numbers and Weighted Index Numbers.

Answer 1

Simple Index Number	Weighted Index Number
(a) Simple index number is a simple average of index number of individual goods.	(a) Weighted index number is a weighted average of products after assigning suitable weights to individual goods.
(b) It is easy to calculate.	(b) It is difficult to calculate.
(c) All commodities are given equal importance.	(c) All commodities are given different levels of importance.
(d) It gives rough estimates of price change	(d) It gives an accurate estimate of price change.
(e) It is less used in practice.	(e) It is mostly used in practice.