Business Statistics

Chapter 3 | Measures of Central Tendency 81

Therefore, the average increase from 1994 to 1996 is 128.64266 – 100

= 28.64266%. Now, we verify the actual situation (Case 1) by comparing it with

the situation where the average increase is 32% (arithmetic average, Case 2), and

when the average increase is 28.64266% (geometric mean, Case 3).

Verication

Case 1: When the commodity price increases by 8% from 1993 to 1994, 12% from 1994 to 1995 and

76% from 1995 to 1996 (Table 3.13).

TABLE 3.13

Commodity price from 1994 to 1996

Year Rate of increase Total increase Price at the end of each year

1993–1994 8% on 100 8 100 + 8 = 108

1994–1995 ...