Q.Using the same four-commodity data as Example 3 (A: p0=10, p1=15; B: p0=8, p1=10; C: p0=5, p1=6; D: p0=12, p1=14), calculate the price index number by the Simple Average of Price Relatives Method.

This method first turns each commodity's own price change into a unit-free relative, then takes a plain average of the four relatives. …

Step 1 — Compute each commodity's price relative, $(p_1/p_0)\times100$.

A: $15/10\times100=150$

B: $10/8\times100=125$

C: $6/5\times100=120$

D: $14/12\times100=116.67$

Step 2 — Average the four relatives ($N=4$). …

Plausibility cross-check against Example 3. The Simple Aggregative Method gave 128.57 on the identical raw data; the two unweighted methods need not give exactly the same figure (each is a genuinely different averaging procedure), but a sensible answer should land i …

Averaging the RAW prices (p1, p0) instead of the price RELATIVES — this method is defined on the unit-free relatives specifically so that commodities in different price units do not distort the average; skipping the relative-co …