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Index Numbers — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsIndex Numbers6 Marks
Question
What is the difference between a price index and a quantity index?
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Answer

 
Price Index
Quantity Index
1.
It measures general changes in prices between current year and base year.
It measures average change in quantities and assists to compare changes in physical quantity of commodities produced and consumed.
2.
Two methods to calculate Price Index Number are:
  • Simple aggregative method.
  • Simple average of price relative method.
Two methods to calculate Quantity Index Number are:
  • Weighted average of price relative method.
  • Weighted aggregative method.
3.
It is also known as unweighted index number.
It is also known as weighted index number.
4.
It considers the prices of the commodity of both base year and current year.
It considers the weights of commodity assigned according to the quantity.

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