St101 Lecture Note 8-03-2012

TYPICAL PERIOD INDEX There is no any valid for selecting the base period prices and quantities or the current period prices and quantities current period prices and quantities for the weights. Therefore instead of using weights related to base and current periods, one can use the prices and quantities related to a typical period as weights. Such an index is known as Typical Period Index A typical period should be selected so that it would represent the importance being typical in relation to the problem under consideration. For example, when inflation is under consideration, a year with high price fluctuation could be used as a typical year. Typical Period Price Index Formula ∑ ∑ Where; : Price in the current/given year : Price in the base year : Quantity in the typical year Typical Period Quantity Index Formula ∑ ∑ Where; : Quantity in the current/given year : Quantity in the base year : Price in the typical year Example: Quantities of three kinds of shares issued by a certain organization and their prices are given in the following table. Since there had b een high price fluctuation in t he year 2007, taking it as the typical y ear and taking 2006 as the base year , Kind of Shares Price Quantities(Shares) 2006( ) 2007 ( ) 2008( ) 2006( ) 2007( ) 2008( ) A 20 24 21 90 100 95 B 15 18 15 95 105 100 C 10 15 12 80 95 90 calculate the typical period price index for 2008 and calculate the typical period quantity index for 2008

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St101 Lecture Note 8-03-2012