Page 237 - DMGT404 RESEARCH_METHODOLOGY

Hitesh Jhanji, Lovely Professional University Unit 11: Index Numbers

Unit 11: Index Numbers Notes

CONTENTS
Objectives
Introduction
11.1 Definitions and Characteristics of Index Numbers
11.2 Uses of Index Numbers

11.3 Construction of Index Numbers
11.4 Price Index Numbers
11.4.1 Use of Price Index Numbers in Deflating
11.5 Quantity Index Numbers

11.6 Consumer Price Index Number
11.6.1 Construction of Consumer Price Index
11.6.2 Uses of Consumer Price Index
11.7 Problems in the Construction of Index Numbers
11.8 Limitations of Index Numbers
11.9 Summary

11.10 Keywords
11.11 Review Questions
11.12 Further Readings

Objectives

After studying this unit, you will be able to:

 Define the conception of index numbers
 Discuss the uses of index numbers

 Describe the construction of index numbers
 Recognize the thought of consumer price index number
 Identify the problems in the construction of index numbers

Introduction

An index number is a statistical measure used to compare the average level of magnitude of a
group of distinct but related variables in two or more situations. Suppose that we want to
compare the average price level of different items of food in 1992 with what it was in 1990. Let
the different items of food be wheat, rice, milk, eggs, ghee, sugar, pulses, etc. If the prices of all
these items change in the same ratio and in the same direction; assume that prices of all the items
have increased by 10% in 1992 as compared with their prices in 1990; then there will be no
difficulty in finding out the average change in price level for the group as a whole. Obviously,

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