Merits and Demerits of Geometric Mean.

Merits of Geometric Mean

  • It is rigidly defined.
  • It is based on all the items.
  • It is capable of further algebraic treatment.
  • It gives less weight to large items and more to small items.

Demerits of Geometric Mean

  • It is difficult to compute.
  • It is not easy to understand.
  • If there are negative values in the series, it can not be computed.

Example of Suitable Average

  • Geometric mean is considered as the best average in the construction of index numbers.
  • When large weights are to be given to small items and small weights to large items, geometric mean is very useful.
  • It is useful in averaging rates; ratios and percentages.

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