INDEX NUMBER

FORM 5
MRSM TUN ABDUL RAZAK
11.1 INDEX NUMBER

An index number is a statistical measure to show the changes of any variable such as prices,
production and many others with respect to time.

The formula to calculate index number is

𝑄1 where Q0 = quantity at base time

𝐼= × 100
𝑄0
Q1 = quantity at specific time

Example 1 :

Price index is an example of index number which is widely used. It tells us how the price changes
over a fixed period of time.

The formula to calculate price index is

𝑃1 where P0 = quantity at base time

𝐼= × 100
𝑃0
P1 = quantity at specific time

Example 2:
 INDEX NUMBER
FORM 5
MRSM TUN ABDUL RAZAK
Practice 1:

1. Find the price index for the following items for the year 2007 based on 2006.

2. Find the following price index :

 INDEX NUMBER
FORM 5
MRSM TUN ABDUL RAZAK
Example 3:

Practice 2 :

1. Based on the year 2003, the index number of an oven for the years 2006 and 2009
are 110 and 130 respectively. Find the index number for the year 2009 based on the
year 2006.

2. The index number of a MP4 player for the year 2016 is 120 based on the year 2013. The
index number for the year 2017 is 130 based on the year 2016. Find the index number for
the year 2017 based on the year 2013.
 INDEX NUMBER
FORM 5
MRSM TUN ABDUL RAZAK
11.2 COMPOSITE INDEX

The formula for composite index is

Σ𝐼𝑖 𝑊𝑖 where 𝐼= index number

𝐼̅ = × 100
Σ𝑊𝑖
W = weightage

Composite index( 𝐼 )̅ is the weightage mean for all the items in a certain situation.

Weightage (W) is a numbered value that represents the importance of each item. Weightage can be
expressed in terms of pie chart, bar chart, percentage or ratio.

Example 4:

Practice 3
 INDEX NUMBER
FORM 5
MRSM TUN ABDUL RAZAK