Question

What are the types of index numbers?

Answer 1

Hint: First, we need to know about the concept of index numbers. index number in statistics is the measurements of change in a variable or across the determined period. It shows general relative change and is not directly measurable. An index number is expressed in the percentage form.

Complete step-by-step solution:
In index numbers the special category of the average for measuring relative changes in such instances where absolute measurement cannot be undertaken. The method of the index number measure alters from one variable to another related variable.
The types of index numbers are Value index number, Quantity index number, and Price index number.
Value index number:
A value index number is formed from the ratio of the aggregate value for a particular period with that of the aggregate value that is found in the base period. The value index is utilized for inventories, sales, and foreign trade, among others.
Quantity index number:
A quantity index number is used to measure changes in the volume or quantity of the goods that are produced, consumed, and sold within a stipulated period.
It shows the relative change across a period for particular quantities of goods. Index of industrial products is an example of the quantity index.
Price index number:
The price index number is used to measure how price alters across a period. It will indicate the relative value and not the absolute values. The CPI consumer price index and then WPI wholesale price index are examples of the price index.
Thus there are $3$ types of the index number and which are Price index, Quantity index and Value index.

Note: The characteristics of the index number are given below.
Index numbers are the special category of the average for measuring relative changes in such instances where absolute measurement cannot be undertaken. The method of the index number measure alters from one variable to another related variable.