Weighted index of prices:
Weighted index number of prices includes weights in proportion to their prices depending upon importance.
These index numbers are certainly more realistic.
Formula for weighted index numbers is
Types of weighted index numbers are
1. Weighted Average of Price Relative Method
2. Weighted Aggregative Method
a. Laspeyre's Method
b. Paasche's Method
Unweighted Price Index numbers:
Unweighted index number of prices does not includes weights.
Its based on change in price purely.
Types of unweighted index numbers:
1. Simple Average
2. Simple aggregate