What is index number?

The percentage changes in the prices , volumes and Quantity of the commodities called index  number 

Hi Abi,

Good evening. In my opinion, Index numbers are meant to study the change in the effects of such factors which cannot be measured directly.For example, changes in business activity in a country are not capable of direct measurement but it is possible to study relative changes in business activity by studying the variations in the values of some such factors which affect business activity. Index numbers are commonly used statistical device for measuring the combined fluctuations in a group related variables.

Index numbers are statistical measures designed to show changes in a variable or group of related variables with respect to time, geographic location or other characteristics such as income, profession, etc. A collection of index numbers for different years, locations, etc., is sometimes called an index series.

Types of Index Numbers:

Following types of index numbers are usually used:

Price index Numbers:

Price index numbers measure the relative changes in prices of a commodities between two periods. Prices can be either retail or wholesale.

Quantity Index Numbers:

These index numbers are considered to measure changes in the physical quantity of goods produced, consumed or sold of an item or a group of items.