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.