1.

Define index number. Mention three limitations of index numbers.

Answer»

Index number is a statistical measure designed to show an average change in a variable or group of related variables over a period. 

The limitations are: 

• Many formulae are used and they give different answers for the index. 

• As the customs and habits change from time to time, the use of commodities also vary. 

• There is an ample scope for bias in the construction of index number.



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