Product diversification, in many cases, involves no quality improvement in the ordinary sense of the word and merely consists of an increase in the number of colors, sizes, and shapes in which an article is offered to the consumer. Nevertheless, such product-line extensions have cost-of-living implications. These are not obvious and seem to have been overlooked by writers dealing with the problem of incorporating quality changes into the Consumer Price Index. It is the purpose of the present paper to rectify this omission.