Question

Distinguish between:

Simple Index Numbers and Weighted Index Numbers.

Answer 1

	Simple index numbers	Weighted index numbers
1)	Simple index numbers are a method of constructing an index number in which every commodity is given equal importance.	Weighted index numbers are a method of constructing an index number in which suitable weights are assigned to various commodities.
2)	This method can be used to construct price, quantity, and value index numbers, but it does not consider the relative importance of commodities.	This method can also be used to construct price, quantity, and value index numbers, and it considers the relative importance of commodities by assigning suitable weights.
3)	It is the easiest method for constructing index numbers.	It is relatively complex compared to simple index numbers.