Method of Price Relatives using Geometrical Mean
Price relatives are used to compare price changes over time. One method to calculate price relatives is by using the geometrical mean. This method is commonly used in Quantity Index Numbers, which are essential in business mathematics and statistics.

Calculation Process:
- First, calculate the ratio of each price to the base period price.
- Next, multiply all these ratios together.
- Finally, take the nth root of the product, where n is the number of price relatives being multiplied.

Advantages of using Geometrical Mean:
- It accounts for the compounding effect of price changes over time.
- It is suitable for data with multiplicative relationships.
- It is more stable compared to other methods like arithmetic mean.

Application in Business Mathematics and Statistics:
- Quantity Index Numbers are used to measure changes in quantities or prices over time in various industries.
- Geometric mean price relatives provide a more accurate representation of price changes, especially in industries with fluctuating prices.
- This method helps businesses make informed decisions based on reliable data analysis.
In conclusion, the method of price relatives using the geometrical mean is a valuable tool in analyzing price changes over time in business mathematics and statistics. It provides a more accurate representation of price movements and is essential for making informed business decisions.