An ideal average in one which satisfies or possesses all the characteristic of an ideal average cited earlier.
As a matter of fact, there is no average which satisfies all the ideal characteristics, and is free from all the limitations of an average. We have seen that all the averages suffer from some limitations. However, comparatively speaking, arithmetic average is considered to be the best of all the averages as it possesses most of the essential characteristics of an ideal average viz.
- Should be simple to understand and compute.
- It should not ignore any item in its computation.
- It should be capable of further algebraic treatment.
- It should be rigidly defined and give a definite value.
- It should be popularly used.
However, before selecting any average to be used, the purpose and nature of the problem are to be kept in view, because the different averages are suitable for different purposes. For example, geometric mean is suitable for making a relative study viz. changes in price level and construction of index numbers. It is also suitable for measuring the average of changes in the rate of increase, or decease in a phenomenon. Harmonic mean, on the other hand, is suitable for measuring the average rate of some functional factors viz. speed, time, distance which possess some reciprocal relations. Mode is suitable for the problems relating to business, commerce, politics etc. where decisions are taken in selecting the most favoured item. Median is suitable for finding the middle item of a series. Arithmetic Average is suitable for making absolute studies and further algebraic treatments.