Two commodities have price relatives of 120 and 150, with weights 4 and 6 respectively. What is their weighted average of price relatives?
Correct answer: C. 138
- A. 132
- B. 136
- C. 138
- D. 142
Explanation
The weighted average is (120 × 4 + 150 × 6) ÷ (4 + 6) = 138. The larger weight assigned to the second commodity pulls the result closer to 150.
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About Index Numbers
Index numbers measure relative changes in prices, quantities or values over time using a base period. Work includes simple and weighted price indices, aggregate methods, consumer price calculations, percentage change and purchasing power, with attention to choosing a base year and interpreting an index rather than treating it as an absolute amount.
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