Geometric Mean

In business and economic problems,

very often we are faced with questions
pertaining to percentage of change over
time. Neither the mean, the median nor
mode is the appropriate average to use
in these instances.
 Simple G.M.
Given n observations x1,x2,…………,xn

G.M = (x1x2,…………xn) 1/n

When the number of observations is three or more the task

of multiplying the number and extracting the root becomes
quite difficult. To simplify the calculations logarithms are
used.
log G.M. = (log x1 + log x2 +…… + log xn)/n
log G.M. = ∑ log xi / n
 Weighted G.M.
If however x1,x2,…………,xn have frequencies f1,f2,…….fn
respectively.

G.M. = (x1f1 x2f2 ,…………xn fn ) 1/N

Log G.M. = (f1log x1 + f2log x2 +…… +fn log xn)/N

= ∑ fi (logxi )/N
 For example
1) G.M of 2,4,8 is

= ( 2 x 4 x 8)1/3

= (64) 1/3
= 43/3

= 4 (Ans)
 Illustration
1) The annual rates of growth of output of a factory in 5
years are 5.0,7.5,2.5,5.0, and 10 respectively. What is the
average rate of growth per annum for the period.

Ans)

G.M. = ( 5 x 7.5 x 2.5 x 5 x 10) 1/5 = (4687.5)1/5

= 5.4% average growth
 Illustration - 1
The annual rates of growth of output of a factory in 5 years
are 5.0,7.5,2.5,5.0, and 10 respectively. What is the average
rate of growth per annum for the period.
Annual rate of Output relatives at Log X
growth the end of the year
5.0 105.0 2.0212
7.5 107.5 2.0314
2.5 102.5 2.0107
5.0 105.0 2.0212
10.0 110.0 2.0414

∑ log xi = 10.1259
G.M. = antilog (∑ log xi / n)

= antilog ( 10.1259/5)

= 105.9

The average rate of growth per annum for

the period is 105.9 – 100 = 5.9 %.
 Application of G.M.
1) The G.M. is used to find the average per cent increase in
sales,production,population or other economic or
business data.
For example, from 2002 to 2004 prices increased by
5%,10% and 18% respectively. The average annual
increase is not 11% as given by the arithmetic average
but 10.9% as obtained by the G.M.This average is also
useful in measuring the growth of population, because
population increases in geometric progression. If the
series of numbers are in geometric progression, G.M is
appropriate average to use.
2) G.M. is theoretically considered to be the
best average in the construction of index
number. It makes index numbers satisfy the
time reversal test and gives equal weights to
equal ratio of change.
 Advantages
1) Given the product and the number of
observations, G.M. can be calculated, even if the
magnitude of each observation is not known.
2) Unlike A.M., G.M. is not affected very much by
the presence of extremely large and small
observations.
3) It can be treated algebrically.G.M of the
composite group can be determined, if the G.M
and the number of observations in each of the
group are known
 Disadvantages
1) It can not be calculated, if any of the
observations is zero.
2) It is difficult to calculate. The calculation
of G.M needs knowledge of logarithms.
3) Like A.M. , G.M. may not be an actual
value of variable.
 Harmonic Mean
Harmonic mean of a set of observations is
the reciprocal of the arithmetic mean of
their reciprocals. Like G.M, H.M. is defined
only when no observation is zero.
 Formula
n n
Simple H.M. = ---------------------------------- = ---------
1/x1 + 1/x2 + ……. + 1/xn ∑ 1/xi

N N
Weighted H.M = ----------------------------- = ----------
f1/x1 + f2/x2 + ……. + fn/xn ∑ fn/xi
 Example
(i) Calculate H.M. of numbers 10,20,25,40 and 50.

Solution:-
X 1/X
10 0.100
20 0.050
25 0.040
40 0.025
50 0.020
∑ 1/X = 0.235
n
H.M. = ------------ = 5 / 0.235 = 21.28 (Ans)
∑ 1/xi
(i) Calculate H.M. from the following frequency
distribution.

X f
0 – 10 8
10 – 20 15
20 – 30 20
30 – 40 4
40 - 50 3
Total 50 =N
 Variable X f f x 1/x
0 – 10 5 8 1.600
10 – 20 15 15 1.000
20 – 30 25 20 0.800
30 – 40 35 4 0.114
40 - 50 45 3 0.067

50 ∑ fi/xi = 3.581

N
H.M. = ------------ = 50/ 3.581 = 13.96 (Ans)
∑ fi/xi
 Uses
The H.M. is a measure of central tendency
for the data expressed in rates such as
kms. per hour, rupees per kg, interest rate
per annum etc.
If the given rates are stated as “x units per
y”,then for finding the average rates, use
i) H.M. when x’s are given.
ii) A.M. when y’s are given.
 For example
i) A person goes from A to B on cycle at 20
m.p.h and returns at 24 m.p.h.Find his
average speed.
Ans) Say distance from A to B is n miles.
Here miles are given.
Total distance cover
Average speed = --------------------------------
Total time required
 Total distance cover
Average speed = --------------------------------
Total time required
n+n 2n
= ----------------------- = ------------------------
n/20 + n/24 n( 1/20 + 1/24)
2
= ----------------------= 21.82 m.p.h
( 1/20 + 1/24)
 Important Note
In order to find the average speed shown in
miles per hour(m.p.h)
i) Use H.M. when miles( distance covered)
are given.
ii) Use A.M. hours( time of journey) are given.
The given miles or hours, as the case should
be used as weights when finding average.
 For example
a) A man travelled 12 hours at 4 m.p.h. and again 10 miles at 5 m.p.h.What
was the average speed?
Ans)
Total distance covered
Average speed = --------------------------------
Total time required
12 x 4 + 10 x 5 98
= --------------------------= ----------= 4.45 m.p.h
12 + 10 22
Σ fixi
Weighted A.M. = ----------------------
Σ fi = N
b) A man travelled 12 miles at 4 m.p.h and again 10 miles at 5 m.p.h .
What was the average speed?

Ans)

Total distance covered

Average speed = -------------------------------------
Total time required
12 + 10 22
= ----------------------------------------= ----------= 4.40 m.p.h
12/4 + 10/5 5

Σ fi N
Weighted H.M. = ----------------- = ----------------
∑ fi/xi ∑ fi/xi
 Advantages
1) H.M. gives the largest weight to the
smallest item and the smallest weight to
the largest item. Hence, when there are a
few extremely large or small values, H.M.
is preferable to A.M., as an average.
 Disadvantages
1) It can not be calculated, if any of the
observations is zero.
2) It is difficult to calculate.
3) Like A.M. , H.M. may not be an actual
value of variable.