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Question
Distinguish between quantity index number and value index number.
Distinguish Between
Solution
| Basis | Quantity Index Number | Value Index Number |
| Meaning | A quantity index number measures the changes in the quantity of goods produced, consumed or sold over time. | A value index number measures the changes in the total monetary value (price × quantity) of goods over time. |
| Formula | Q.I.N. = `(sum"q"_1)/(sum"q"_0) xx 100` | V.I.N. = `(sum"p"_1"q"_1)/(sum"p"_0"q"_0) xx 100` |
| Focus | It focuses only on changes in quantity while keeping prices constant. | It focuses on changes in both price and quantity over time. |
| Use | Used to study changes in production, consumption, imports, exports, etc. | Used to analyze total sales, revenue, and market growth. |
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