You are viewing: What is Weighted Average

### weighted average

**Define**

**Weighted average **in english is **weighted average **nice**weighted 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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