Theory: The Two-situation Case
The given data are sets of observations of prices and quantities for n commodities (goods and services). The data relate to specified groups (e.g. of buyers or sellers) in defined markets or geographical areas and for particular time periods. It is convenient, but not essential, to think of a specified group of consumers purchasing the goods and services and to describe the set of quantities as a budget for the group of consumers. This, at least, serves to keep the economic aspect of index numbers clearly in mind.
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