a weighted average is a method for averaging several pieces of data with unequal importance or consequence. in a weighted average, each point of data is assigned a corresponding weight multiplier that can be determined by many values including importance, scarcity, difficulty and quantity. stock indices offer a great example of weight averaging. because of the disparity in price of the stocks represented on an index such as the dow jone's industrial average, the price swings of higher valued stocks could disproportionately affect the average of the index, even though the swing in percentage from that individual stock is actually minor. by using a weighted average, the lower priced stocks can have an increased effect on the average, thereby equalizing the data measurement. for example, sum wants to get the average cost of widgets he has on hand. he has one set consisting of 100 widgets at ¢25 per piece. another set of widgets costs ¢30 each and he has 75 of them. he then multiplies his ¢25 pieces by 100 to get $25 and his ¢30 pieces by 75 to get $22.50, totaling the cost of his inventory at $47.50. dividing the total value of his widgets with his quantity, sum calculates the average cost to be roughly ¢27 per piece. this method allows him to account for uneven quantities and fluctuations in costs.