# Math

Topics: Arithmetic mean, Price index, Inflation Pages: 13 (3382 words) Published: June 16, 2013
INTRODUCTION
In our daily lives, we come across news like "prices of goods rising!" or "super discount!". This means that we have to pay a higher or a lower price for the same goods or services. Very often we use index numbers to indicate these changes.

In Form 4, we have learnt about Index Number from Chapter 11 in Additional Mathematics.

Do you know what exactly Index Number is?
Well, an index number is an economic data figure reflecting price or quantity compared with a standard or base value. The base usually equals to 100 and the index number is usually expressed as 100 times the ratio to the base value. For example, if a commodity costs twice as much in 1970 as it did in 1960, its index number would be 200 relative to 1960. Index numbers are used especially to compare business activity, the cost of living, and employment. They enable economists to reduce their business data into easily understood terms.

Creativity Zone! Let’s Think!
Were things cheaper last rear?
Has anything not risen in price?
What has increased the most?
How much more pocket money do you need
to buy the same things as last year?

In this chapter, we will learn to compare the changes of these prices over a period and interpret the data in suitable method. Creativity Zone! Let’s Think!
Were things cheaper last rear?
Has anything not risen in price?
What has increased the most?
How much more pocket money do you need
to buy the same things as last year?

In this chapter, we will learn to compare the changes of these prices over a period and interpret the data in suitable method.

We often heard about several terms like Price Index, Weightage and Composite Index, and now let’s see what actually they are!
P A R T O N E
To understand the terms of Price Index, Weightage and Composite Index and describe briefly.
(I have carried out a deep research through discussion with friends and collected some useful information from internet):
PRICE INDEX
A price index is a normalized average (or a weighted average) of prices for a given class of goods or services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations. Uses of Price Index:

For broad indices, the index can be said to measure the economy's price level or a cost of living. More narrow price indices can help producers with business plans and pricing. Sometimes, they can be useful in helping to guide investment. Extra Knowledge: Plural nouns for “price index” are “price indices” and “price indexes”. : Symbol of Price Index (I )

Time Zone: In 1707, Englishman William Fleetwood created perhaps the first true price index.

WEIGHTAGE
Weightage is a weighting factor assigned to compensate for perceived disadvantages. It shows the relative importance of an item compare to another item. For instance, items that we spend more will definitely play a more significant role and hence, is assigned with a larger weightage. Extra knowledge: Weightage are usually related to ratio and percentage. : Symbol of Weightage (w)

COMPOSITE INDEX
A composite or a composite index is a combination of equities or indexes intended to measure the overall market performance over time. Uses of Composite Index:
Composite Index is a useful tool for measuring and tracking price level changes to an entire stock market or sector. Therefore, they provide a useful benchmark against which to measure an investor's portfolio. The goal of a well-diversified portfolio is usually to outperform the main composite indexes. Extra knowledge: Also known simply as a "composite".

: Symbol of Composite Index ( )

To learn how to represent weightage in four different ways.
Values of each item obtained will be converted into sectors and is represented by degree in a PIE CHART. The total degree when every sectors sum up must be...