What is the weighted average – Troubleinthepeace


The weighted average is calculated on the basis of the averaged participants having different roles in the size of contributions.

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weighted average

Define

Weighted average in english is weighted average niceweighted mean.

The average number is an indicator that represents the typical level of a population consisting of many units of the same type defined according to a certain criterion.

A weighted average is a form of average or arithmetic mean in which the elements used in the calculation are weighted to reflect the fact that not all elements are of equal importance. same.

Nature

– Weighted average is calculated on the basis of averaged participants having different contribution sizes.

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– Unlike a weighted average, a simple average is calculated on the basis of averaging participants that have the same size (frequency) role.

The formula for determining and the role of the weighted average

Determination formula

For each quantity of variable xi with corresponding weight/frequency wi. The weighted average is determined by the formula:

Weighted Average= (xi.wi) / wi

In there

xi is the value of the observed variable

wi is the weight or frequency of the observed variables

Weighted average commonly used in price indexes to reflect the percentage of a consumer’s budget spent on different items in order to determine the average increase in prices.

For example

Suppose a consumer’s standard of living is represented by three typical goods A, B and C that he buys. During the study period, the prices of the three goods increased by 35%, 10% and 45% respectively.

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If a consumer uses all his income to buy three goods in the proportions of 20%, 50%, and 30% respectively, but we ignore this fact and calculate the average by adding prices together, then divide by 3 (i.e. unweighted):

(35% + 10% + 45%)/3 = 30%

The results show that the average price increase is 30%. But the result will be different if we calculate the weighted average:

35 x 20% + 10 x 50% + 45 x 30% = 25.5%

The weighted average is a more representative average of price increases, because it is not only the increase in the price of each good, but also the weight, or weight, of the price.

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