Abstract
PROFESSOR COCHRANE has recently presented in the Journal of Farm Economics a revised version of his hypothesis concerning the irregular shifting of the aggregate agricultural supply function to the right as a result of the adoption of new technology.2 Briefly his thesis is that the function is almost perfectly inelastic; further, it holds steady for a period of years of constant technology, jumps sharply to the right during a period of improving technology, then repeats the process. To subject this hypothesis to empirical testing, some method is needed to identify periods of constant technology and those of changing technology. In his most recent article, Cochrane computed an of production efficiency as the ratio of the index of volume of farm marketings and home consumption to an index of total agricultural inputs.3 Professor Schultz performs a similar analysis. He computes two indexes of the physical volume of agricultural inputs and compares changes in the volume of inputs with changes in the volume of agricultural production for sale and home consumption.4 The computation and evaluation of these measures of inputs, outputs and technology is a problem in index numbers. The purpose here is to investigate the biases in these indexes. First, we need the following notations:
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