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Index Numbers

Question
CBSEENST11024683

Write down the limitations of simple aggregative method.

Solution

Following are the limitations of the simple aggregative method:

1. Here the items are treated equally. The weightage is assigned to any item according to its importance. The costlier goods get high weightage naturally. For example, the price of gold is very high. So, it gets more weightage.

2. Items with large weights also get more weightage than the items with low weights.