Q.Using the same base-year and current-year prices as above, calculate the Price Index Number by the Simple Average of Price Relatives method.

This method first turns every commodity's price change into its own percentage relative, and only then averages those relatives.

Step 1 — Compute each price relative $\left(\dfrac{p_1}{p_0}\times100\right)$.

Step 2 — Average the relatives.

Dual-check: re-adding the relatives in a different order, $110+110=220$, $220+120=340$, $340+125=465$ — same total, confirming $465\div4=116.25$.

Note: this answer (116.25) legitimately differs from the Simple Aggregative Index found in the previous example (114) — the two simple methods use different arithmetic and are not expected to match.

A common error is to average the raw prices instead of the relatives, or to divide the sum of relatives by $\Sigma p_0$ instead of by $n$ (the number of commodities). Getting a different answer from the aggregative method is not a mistake — it is expected.