Construction of weighted index number
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In weighted index number each item is given weight according to the importance. There are two group methods to calculate index number of this category:

Weighted aggregate method

Weighted average of price relative method
Here, two types of weighted aggregate method are used to calculate weighted index number:

Laspeyre’s Method [Uses base year quantities ]

Paasche’s Method [ Use current year quantities as weights]
Example:
Commodity  Price (in Rs.)  Quantity bought in units  
1997  1998  1997  1998  
A  50  52  10  12 
B  7  9  3  4 
C  3  5  7  6 
Find the price index number from the following data.
(a) Laspeyre’s Method
Steps:
1. Multiply with to get for each item/commodity and service.
2. Multiply with to get for each item/commodity and service.
3. Add all by and multiply by 100 to obtain Laspeyre’s price index number.
Formula:
Solution:
Commodity 





A  50  10  52  520  500 
B  7  3  9  27  21 
C  3  7  5  35  21 

 

(B) Paasche’s Method
Formula:
Solution:
Commodity 





A  50  10  52  600  624 
B  7  3  9  28  36 
C  3  7  5  18  30 

 
