BCom 1st Year Index Number Short Notes Question Answer

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Q.1 Write short note on index numbers and its uses.

Ans. Index numbers: An index number is a statistical measure that is designed to show changes in a variable or group of related variable or group of related variables with respect to time geographic location or other characteristics, such as profession, income, etc.

Uses: the uses of index numbers are as follows:

Index number are mainly used in business and economics like barometers are used in physics.
Index bnumber is used to measure the relative changes in a variable or a group of related variables with respect to time like price level, cost of living, etc.
Many governmental and private agencies are engaged in computation of index number for the purpose of forecasting business and economics conditions.
Index numbers are also used for determining the real gross National product (GNP) or income calculated at the current prices. Real GNP or income calculated at the current prices
Index numbers can be used for providing incentive to the efficient workers for this purpose, productivity indices are generally constructed, i.e. if the overall productivity of the firm increases, they will stand to gain as they will get productivity bonuses for their performances.