What Is an Average Price?

The average price refers to the average price of the same product in a certain period (such as year, quarter, month) or a certain region (such as the country, province, city, county). In China's price statistics, it is the basic data for compiling various price indexes, calculating various price differences, price comparisons, and price analysis. The method of calculating the average price depends on the information and actual needs. Commonly used are: (1) Simple average calculation method. That is, the prices of a certain commodity surveyed during a period are added up one by one, and then divided by the number of price surveys. (2) Weighted average price. There are two calculation methods. First, it is weighted by the number of days of purchase (sale) before and after the adjustment of the commodity price. Second, weighted calculations are based on the purchase (sale) volume of various prices of goods. (3) Mixed average calculation method. This law is applicable when only the total amount and quantity of a certain type of goods are grasped, but the purchase (sale) price of the goods is not grasped. ^[1]

average price

The average price refers to the average price of the same product in a certain period (such as year, quarter, month) or a certain region (such as the country, province, city, county). In China's price statistics, it is the basic data for compiling various price indexes, calculating various price differences, price comparisons, and price analysis. The method of calculating the average price depends on the information and actual needs. Commonly used are: (1) Simple average calculation method. That is, the prices of a certain commodity surveyed during a period are added up one by one, and then divided by the number of price surveys. (2) Weighted average price. There are two calculation methods. First, it is weighted by the number of days of purchase (sale) before and after the adjustment of the commodity price. Second, weighted calculations are based on the purchase (sale) volume of various prices of goods. (3) Mixed average calculation method. This law is applicable when only the total amount and quantity of a certain type of goods are grasped, but the purchase (sale) price of the goods is not grasped. ^[1]

The average price of the same or similar commodity in a certain period or area. It reflects the general level of the price of a certain commodity within a certain period of time and within a certain region.

The average price is calculated based on the original record of the purchase and sale of goods and is the basis of calculation in the price index. The calculation formula is:

formula

In the formula, P represents the actual price of this type of product in different periods, different locations, different specifications or different price forms; Q represents the corresponding transaction volume; PQ is the total amount of purchase (or sale) of the product; Q is The total quantity of goods purchased (or sold); represents the average price of a single item, and is essentially a weighted average price. The total quantity and total amount of goods purchased and sold by this formula is sometimes difficult to grasp, so when calculating the average price, it is often based on this formula, and according to the original data actually available, various methods are used for calculation. The methods often used to calculate the average price include simple arithmetic average method, weighted arithmetic average method (including weighted arithmetic average method by sales days, weighted arithmetic average method by purchase and sales quantity or amount), and the reciprocal formula of weighted arithmetic average method, that is, weighted harmonic average method In addition, there are simple geometric averaging, sequential time averaging, and mixed averaging.

The average price is a quality indicator for comprehensive accounting of the national economy. It is the basic data for the compilation and calculation of various commodity price indexes, and the calculation of price differences and parities for various commodities. It provides the basis for calculation and analysis for the study of the price comparison relationship between various commodity prices and the trends and degrees of various price movements in the price system.