 Hello and welcome to the session. In this session first of all let us discuss price relative. Now a price relative or simple relative is a ratio of the price of certain commodity in a given period to its price in an earlier fixed period or the base period or reference period expressed as a percentage. So the price relative is equal to the current price over base price into 100. All even right, price relative is equal to P1 over P0 into 100 where period and P1 denote the commodity price during the base period and a given period respectively. Now let us discuss one example. Now let rise dollars per kg 1999 and at 2002 2002 with 1999 as the base year is equal to the current price which is 7 dollars per kg over the base price which is 5 dollars per kg into 100 which is equal to 140. 1999 is of constructing unrated index numbers. Now unrated index numbers are the commodities to importance. Now they are constructing index numbers for simple aggregate methods of price relative method. An aggregate method divided by the sum of the base year prices and the quotient is multiplied by 100 that is P01 is equal to summation P1 over summation P0 into 100 where summation P1 summation P0 denotes the aggregate denotes index number with reference to the base. Now let us discuss one example for this. In this let us construct price index number for the year 1980 based on the year 1981 using simple aggregate method. Now here the commodities are given to us A, B, C and D and the price in 1918 in dollars is given as 50, 45, 35 and 20 and the price in 1981 in dollars is given as 40 and 25. Now here the year 1981 is the current year. Here we will take 1980 as index number. We will use the prices in the current year as P1 and let us denote the prices in the base year and now we will find summation P1 P0 on calculating that is on adding or rewriting summation P1 as 175, rewriting summation P0 is equal to 150. So the price index number P01 is equal to summation P1 over summation P0 into 100. This will be now summation P1 is 175 summation P0 is 150. So this will be 175 over 150 into 100 and this will give P01 that is the price index number is equal to 116.67. If the total prices in the year 1980 is represented by 100 then the total prices in the year 1981 will be represented by 116 point to aggregate price index 1991 taking the year 1980 and therefore for calculating the price index number in the first step we will add the prices of the different commodities the current year and then we will obtain summation P1 then in the of the commodities of the base year summation P0 and then in the next step divide the total of the current year with the base year that is summation P1 over summation P0 to quotient by 100. So the price index number P01 will be equal to summation P1 over summation P0 into 100. This method can be applied when the prices of all the commodities have been expressed in the same unit and if the units are different the result will be misleading. It's a relative method. Now in this method first of all the price relative calculating for this the price in the current year that is P1 is divided by the price in the base year that is P1 is multiplied by 100. The price relative of the average is taken by using any measure of central value that is arithmetic mean or geometric mean or harmonic mean or median or mode but here we will discuss of price relatives index number P01 is equal to and take the average of the price relatives the sum of the observations over number of observations. So P01 will be equal to summation of into 100 the whole. When you got the number of observations that is this one example this we have to calculate the price index number by simple average of relative method for this given data the commodities are given to us as A, B, C and D and the price in 1980 in dollars is given as 50, 45, 35, 20 and the price in 1981 in dollars is given as 60, 50, 40 and 25. Here the year 1981 is the current year so the prices in the year 1981 will be denoted by P1 and 1981 the year 1980 is the base year so the prices in the year 1980 will be denoted by P0. The solution here we will make one more column the price relatives which will be calculated by using the formula P1 over P0 into 100. So we will compute the price relatives of all the commodities under consideration the price relatives will be P1 over P0 that is 60, 120 and TB the price rate over P0 that is 50 over 45 into 100 which is equal to 111.11 then for the commodity C 40 over 35 into 100 which is equal to 114.24d the price related will be 25 over 20 into 100 which is equal to 125. For the values of the price relatives summation of P1 over P0 into 100 the whole is equal to 17.39. The price index number is by using the arithmetic mean so by using the arithmetic mean P1 will be equal to summation of P1 over P0 into 100 per whole over one number of observations that is m P1 over P0 into 100 per whole is equal to 470.39 and the number of observations so P0 1 will be equal to 470.39 over 417. So you have learned about price relative and then the methods of constructing the unrated index numbers. So this completes our session hope you all have enjoyed the session.