ABSTRACT
Index numbers are a common factor of everyday life. Many critics of index numbers argue that a single value cannot be representative of several hundred statistical series. However, the use of index numbers is so widespread that no amount of criticism will eliminate their use. Furthermore, there is no need to eliminate the use of index numbers, but it is important to understand how index numbers are constructed in order to use and interpret them correctly. The Paasche Index uses quantities in the current period as weights. That is, the value index is simply the ratio of the total value of goods in the current period to the total value in the base period. The calculation of an index requires the definition of a base period, the determination of the appropriate weights, and the recording of prices.
