# Distinguish Between

1. Simple Index Numbers and Weighted Index Numbers

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In this method, every commodity is given equal importance. It is the easiest method for constructing index numbers. | In this method, suitable weights are assigned to various commodities. It gives relative importance to the commodity in the group. In most of the cases ‘quantities’ are used as weights. |

This method can be applied to determine the Price Index Number, Quantity Index Number, and Value Index Number. | There are various methods of constructing weighted index numbers such as Laaspeyre’s Price Index, Paasche’s Price Index, etc. |

2. Price Index and Quantity Index.

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1. Price Index Number is calculated by two methods, namely a. Simple Aggregative Method b. Simple Average of Price Relative Method | 1. Quantity Index Number is calculated by two methods, namely a. Weighted Average of Price Relative Method b. Weighted Aggregative Method |

2. Price Index number is also known as the Unweighted Index Number. | 2. Quantity Index Number is also known as Weighted Index Number. |

3. Price Index Number takes into account the prices of the commodity of the base year as well as of the current year. | 3. Quantity Index takes into consideration the weights of goods assigned according to the quantity. |

3. Laaspeyre’s Index and Paasche’s Index.

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1. In Laaspeyre’s index, base year quantities are taken as weights. | 1. In Paasche’s index, current year quantities are taken as weights. |

2. Laaspeyre’s index can be calculated as Laaspeyre’s index = p1q0/p0q0 * 100 ∑p1q0/∑p0q0×100 | 2. Paasche’s index can be calculated as Paasche’s index = p1q1/p0q1* 100 ∑p1q1/∑p0q1×100 |