An index number is an economic data figure reflecting price or quantity compared with a

standard or base value.[1][2] The base usually equals 100 and the index number is usually
expressed as 100 times the ratio to the base value. For example, if a commodity costs twice as
much in 1970 as it did in 1960, its index number would be 200 relative to 1960. Index numbers
are used especially to compare business activity, the cost of living, and employment. They enable
economists to reduce unwieldy business data into easily understood terms.

In economics, index numbers generally are time series summarising movements in a group of
related variables. In some cases, however, index numbers may compare geographic areas at a
point in time. An example is a country's purchasing power parity. The best-known index number
is the consumer price index, which measures changes in retail prices paid by consumers. In
addition, a cost-of-living index (COLI) is a price index number that measures relative cost of living
over time.[3] In contrast to a COLI based on the true but unknown utility function, a superlative
index number is an index number that can be calculated.[3] Thus, superlative index numbers are
used to provide a fairly close approximation to the underlying cost-of-living index number in a
wide range of circumstances.[3]

There is a substantial body of economic analysis concerning the construction of index numbers,
desirable properties of index numbers and the relationship between index numbers and economic
theory

A price index (plural: “price indices” or “price indexes”) is a normalized average (typically
a weighted average) of prices for a given class ofgoods or services in a given region, during a
given interval of time. It is a statistic designed to help to compare how these prices, taken as a
whole, differ between time periods or geographical locations.

Price indices have several potential uses. For particularly broad indices, the index can be said to
measure the economy's price level or a cost of living. More narrow price indices can help
producers with business plans and pricing. Sometimes, they can be useful in helping to guide
investment

Composite Index Number:

A composite index number is a number that measures an average
relative changes in a group of relative variables with respect to a base

HISTORY OF INDEX NUMBER

 Index numbers are meant to study the change in the effects of such factors
which cannot be measured directly. According to Bowley,³Index numbers are used
to measure the changes in some quantity which we cannot observe 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 activit y by
studying the variations in the values of some such factors which affect business
activity, and which are capable of direct measurement.
Index numbers are commonly used statistical device for measuring the
combined fluctuations in a group related variables. If we wish to compare the price
level of consumer items today with that prevalent ten years ago, we are not
interested in comparing the prices of only one item, but in comparing some sort of
average price levels. We may wish to compare the present agricultural production
or industrial production with that at the time of independence. Here again, we have
to consider all items of production and each item may have undergone a different
fractional increase (or even a decrease). How do we obtain a composite measure?
This composite measure is provided by index numbers which may be defined as a
device for combining the variations that have come in group of related variables
over a period of time, with a view to obtain a figure that represents theµnet¶ result of
the change in the constitute variables.
Index numbers may be classified in terms of the variables that they are
intended to measure. In business, different groups of variables in the
measurement of which index number techniques are commonly used are (i)
price, (ii) quantity, (iii) value and (iv) business activity. Thus, we have index of
wholesale prices, index of consumer prices, index of industrial output, index of
value of exports and index of business activity, etc. Here we shall bemainly
interested in index numbers of prices showing changes with respect to time,
although methods described can be applied to other cases. In general, the present level of
prices is compared with the level of prices in the past.
The present period is called the current period and some period in the past iscalled the
base period

Index Numbers:
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
Malaysia
The air quality in Malaysia is reported as the API or Air
Pollution Index. Four of the index's pollutant components (i.e.,
carbon monoxide, ozone, nitrogen dioxide and sulfur dioxide)
are reported in PM10 particulate matter is reported in g/m³.
Unlike the American AQI, the index number can exceed 500.
Above 500, a state of emergency is declared in the reporting
area. Usually, this means that non-essential government
services are suspended, and all ports in the affected area
closed. There may also be a prohibition on private sector
commercial and industrial activities in the reporting area
excluding the food sector
The concept may be extended well beyond an exchange. The
Dowones Total Stock Market Index, as its name implies,
represents the stocks of nearly every publicly traded company
in the United States, including all U.S. stocks traded on
the New York Stock Exchange (but not ADRs) and most traded
on the NASDAQ and American Stock Exchange. Russell
Investment Group added to the family of indices by launching
the Russell Global Index.
More specialised indices exist tracking the performance of
specific sectors of the market. The Morgan Stanley Biotech
Index, for example, consists of 36 American firms in
the biotechnology industry. Other indices may track companies
of a certain size, a certain type of management, or even more
specialized criteriaone index published by Linux Weekly
News tracks stocks of companies that sell products and
services based on the Linux operating environment.
Index versions
Some indices, such as the S&P 500, have multiple
versions.[1] These versions can differ based on how the index
components are weighted and on how dividends are accounted
for. For example, there are three versions of the S&P
500 index: price return, which only considers the price of the
components, total return, which accounts for dividend
reinvestment, and net total return, which accounts for dividend
reinvestment after the deduction of a withholding tax. As
another example, the Wilshire 4500 and Wilshire 5000 indices
have five versions each: full capitalization total return, full
capitalization price, float-adjusted total return, float-adjusted
price, and equal weight. The difference between the full
capitalization, float-adjusted, and equal weight versions is in
how index components are weighted.

Uses and importance of air pollution index and stock market

index
As everyone can see,the air pollution index is use by the
government to measure the air quality index and to detect any
pollutants in our country¶s air.This is to ensure the air is clean
and safe for us to inhale.Besides that,an early warning can be
given to us if the air pollution is to high for us to get out of our
homes. This warning is given based upon readings and
interpretations of the air pollution index.
As for the stock market index, it is mainly for the business
entrepreneurs. This type of index is used to determine the
outcome of a stock market and also the conclusion of a stock
market. The stock market index is important because a
country¶s economical state sometimes depend on it

Air Pollution Index

Air pollution is the introduction of chemicals, particulate
matter, or biological materials that cause harm or discomfort to
humans or other living organisms, or damages the natural
environment into the atmosphere.
The atmosphere is a complex dynamic natural gaseous system
that is essential to support life on
planet Earth. Stratospheric ozone depletion due to air pollution
has long been recognized as a threat to human health as well
as to the Earth's ecosystems.
The Air Quality Index (AQI) (also known as theAir Pollution
Index(API) or Pollutant Standard Index(PSI) is a number
used by government agencies to characterize the quality of the
air at a given location. As the AQI increases, an increasingly
large percentage of the population is likely to experience
increasingly severe adverse health effects. To compute the AQI

requires an air pollutant concentration from a monitor or model.

The function used to convert from air pollutant concentration to
AQI varies by pollutant, and is different in different countries.
Air quality index values are divided into ranges, and each range
is assigned a descriptor and a color code. Standardized public
health advisories are associated with each AQI range. An
agency might also encourage members of the public to
take
public transportation or work from home when AQI levels are
high.
Limitations of the AQI
Most air contaminants do not have an associated AQI. Many
countries monitor ground-level ozone, particulates, sulphur
dioxide, carbon monoxide and nitrogen dioxide and
calculate
air quality indices for these pollutants.
Causes of Poor Air Quality
The AQI can worsen (go up) due to lack of dilution of air
emissions by fresh air. Stagnant air, often caused by
an anticyclone or temperature inversion, or other lack
of winds lets air pollution remain in a local area.
Indices by location
South Korea
The Ministry of Environment of South Korea uses the
Comprehensice Air-quality Index (CAI) to describe the ambient
air quality based on health risk of air pollution. The index
aims
to help the public easily understand air quality level and protect
the health of people from air pollution. - The CAI has values of
0 through 500, which are divided into six categories. The higher
the CAI value, the greater the level of air pollution. - Of values
of the five air pollutants, the highest is the CAI value.

CAI Description
Health Implications
0-50
Good
A level that will not impact patients
suffering from diseases related to air
pollution.
51-
100
ModerateA level which may have a meager impact
on patients in case of chronic exposure.
101-
150
Unhealthy for
sensitive
groups
A level that may have harmful impacts on
patients and members of sensitive
groups.
151-
250Unhealthy
A level that may have harmful impacts on
patients and members of sensitive
groups (children, aged or weak people),
and also cause the general public
unpleasant feelings.
251-
350Very unhealthy
A level which may have a serious impact
on patients and members of sensitive
groups in case of acute exposure.
351-
500Hazardous
A level which may need to take
emergency measures for patients and
members of sensitive groups and have
harmful impacts on the general public.