national currencies. The Geary-Khamis method solves this by using national prices after conversion into a common currency using the purchasing power parities (PPP). Hence, the international price, Pi of the i-th commodity, is defined as:

This equation implies that the international price of the i-th commodity is calculated by dividing the total output of the i-th commodity in all selected countries, converted into international dollars, using purchasing power parities, by the total quantity produced of the i-th commodity.