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In this method, the index number is equal to the sum of prices for the
year for which index number is to be found divided by the sum of
actual prices for the base year.
The formula for finding the index number through this
method is as follows:
2. Simple Average of Price Relatives Method:
In this method, the index number is equal to the sum of
price relatives divided by the number of items and is
calculated by using the following formula:
