What is the difference between simple index number and weighted index – InterviewSolution

1.	What is the difference between simple index number and weighted index number?
Answer» In simple index numbers only prices are taken into account where consumption pattern of different items is assumed to be same.... But if we think practically then consumption of sugar & gold is not same... Or consumption of salt & oil is not same... Therefore value of the items & total value is different than that of actual... Therefore, in weighted index numbers weights are used.. Theses weights are supposed to take care of consumption & hence will give true value & index number should reflect the actual situation...

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