Index Numbers

Question 1

What is the formula used to work out index numbers

Answer 1

Index numbers = quantity / quantity in base year x100

Question 2

If you had a question for base years saying - in January 1980 soap was 40p, in January 1985 it was 60p. If we use January 1980 as a base year what is the index number for 1985

Answer 2

60 / 40 x 100 = 150

The answer is 150%

Question 3

What is an index number

Answer 3

An index number is a statistical measure designed to track changes over a period of time in the price, quantity or value