 Under the chapter of consumer behavior we are going to study price index. What do we mean by the price index? As we have previously studied that there can be any type of the index and that index will be a standardized Mayer to have a comparison between the two consumption bundles. So for that a standard Mayer we can assign any weight to that. So when we say the price indexes it means now the comparison will be of various bundles on the basis of the price difference and why we require this? It means when a consumer has to decide in the consumption of various bundles from time to time he want to compare that either he is well off or either his welfare has reduced or what is the total level of expenditure that he is going to incur on the same bundle. Or if we say in the other words that a consumer has to compare the consumption of their previous consumption to the consumption of today's consumption whenever he wants to compare then he has to see somewhere that because of the decline in the prices of the same basket of goods that expenditure is incurring, there has been an increase or a decrease and if there has been an increase then the percentage of that increase is so much that he will use the parameters to compare that to the price indexes. Now how will we calculate the price indexes? So the way we have already said that we have a combination of commodities and for that combination of commodities we decide that they are on two time periods, I mean one will be the base period and other will be the current period of that time. So we do the time comparison of those two times, so we have two bundles of commodities, two time frames and at that time, the same way that we have to do the prices, so the prices of those assets will be of the base period and some of the prices will be of the current time. So now over this time, from base to current, the price that has been reduced or reduced or increased, so when we express this change in percentage, so that will be our price index. Now if we look at this, so when we look at the consumer, so is it only through the price index that it is being used in general life? You students, you must be aware that generally, we talk about consumer price index, we talk about brand equity index, we talk about quality index, similarly we can compare the consumer confidence index. When we come to the satisfaction of the customer, we can also see that the customer's satisfaction increase or decrease, so various types of indexes that are used in economics, but particularly what we use for the assessment of welfare of the consumer, related to consumption, those price indexes. Now in this price index, if we look at it, so we have mostly two price indexes that we are using and which we are using on the weighted average of prices. Now when it comes to the weighted average of prices, we have to see that for a commodity pose, we say that one of the family members had taken a refrigerator 10 years ago, and he has taken a refrigerator today, so this commodity, because they are taking it once, and it is in that form in which the price does not change very frequently, but in comparison to this, we are buying those things that are dying every day, we buy some vegetables, we buy some fruits, so it is possible that the value of the thing is something else in the morning , or today it is more expensive, the next day it is less than 5 rupees, the next day it is increased by 5 rupees, so when we talk about Asia, so we will take it in the weighted average that we took its weighted average in a week or a month, and sometimes we can take seasonal averages so that the price is showing a particular amount or point. Here two price indexes come in front of us, one is called Pasha price index and the other is less pure price index, now if we talk about Pasha price index, how it was developed, so German economist Hermann Prashe explained it, so that is why his name is in front of us, now if we look at it in this way, we have decided in index numbers that there will be the various commodities, now if we look at here, X1 and X2 are the bundle of two commodities, which are on the current time period T, and similarly the same quantity is in the base period, so these are the quantities of both the commodities in the base period, and we have assigned them to the base period of weight, in the same index numbers, in the same formula, the time we substitute with the quantities of the time period T, then it becomes Pasha price index, so if we look at it, then this commodity XT is in the same form here, but this base period is again substituted by time period T, and similarly this upper one is the same, but now this base period is substituted by time T, so when these all commodities quantities are substituted with the quantities then the rest that we have and their prices are relevant, so this becomes our Pasha price index, now when we look at this index, what we have utilized is only X1 and X2, i.e. only two commodities are available, but in life, in general consumption, a consumer buys various products, such as clothes, clothes, house, education, health, all these sectors, then there can be a long list of the consumption, and when this long list is there, then we can calculate it, so there is a very simple way in which we say that in this form Pasha price index will be equal to the sum of, now what will we do with the sum? The sum of, now what will we do with the sum? All commodities, the amount that they are buying at the current time, the quantity multiplied by the price of that commodity, now if we look here it can be price of X1 multiplied by 8, again price of 2 commodity X2, price of X3, X3, price of 4, X4 and likewise it can be price of n, Xn, so a long list of commodities can be added here, and likewise in the denominator, there will be the total expenditure for all the items that the consumer is going to purchase at the base period, but with the price of current time, so when this formula we are going to explain, we take that we are going to utilize all the quantities of the current time, so keeping in view this, we are having current weighted index, now looking at this index, it is not that this index is perfect for us, it has some advantages and some disadvantages, now if we go to its disadvantages, since we are measuring in the current period, so because in the current time, to assess all commodities, take their data, their quantity and their price is somewhat costly, and then give them weightage, they increase their work, and one thing in this is that it understates a lot of changes and because of this, it understates it, and over the time, i.e. from the base period, the preferences of the consumer might be there are certain changes, with the time of age or the weather or due to any other factors, so this is because it does not include the change or preferences, but the benefit of this is that it is not upward biased, and if we want to go for the future, then we do not have to assess its quantities, now how will we utilize it, now since we have a lot of things to look at the prices in this, we see that bundles have to go previously, we will introduce a expenditure index here, in which we say that if the price index of the past is greater than 1, it is possible that it will be less than 1, but in this case, if it is greater than 1, then how we can say from this inequality that the welfare of the consumer has already increased or decreased, so it is very difficult that we can tell it in simple words, so what we do in that is, we include a expenditure index in it, and we see the change of that expenditure index, now if we look at the expenditure index, then the difference is that in this, our numerator has all the quantities and prices at the current rate, and in the same way the denominator has all the quantities and prices at the base period, so it means that expenditure actually it measures the change all over the from base to current, now we include that if we utilize that if the past index is greater than 1, so we say that the past index is greater than our expenditure index, and keeping this inequality, we cross multiply this inequality, and when we cross multiply, then this part of the equation it comes here, and this part of equation it goes here, and this part is going to be cancelled by each other, and then this means price and commodity at base period of all it becomes greater than the consumption bundle that was at current level, but with the prices of base, and now we can assess that whatever our consumer is, if we look at his preference, then he is giving preference to the current person on the basis of his base period.