The Use of Index Numbers for Measuring Output of Multi-Product Systems

Abstract

Measurement of output for a multi-product system often relies on revenue as a yardstick, but such an approach is inadequate for measures of physical output or aggregate price. Many alternative methods, based on the use of index numbers, are outlined and compared for a simple example. The strengths and weaknesses of these methods are discussed, and ways of overcoming difficulties due to discontinuities in the product range are suggested.