The Substitution Bias in the Construction of the CPI Arises

question 94

Multiple Choice

The substitution bias in the construction of the CPI arises because:

• A) consumers alter their buying habits as new products come into being and lifestyles change.
• B) technological changes have led to improvements in quality and lower production costs over time.
• C) consumers alter the goods they buy, switching from relatively high priced goods toward lower-priced alternatives.
• D) consumers shop at both high-priced department stores and lower-priced discount stores.

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Definitions:

Represents

To act on behalf of someone or something, often in a legal or official capacity.

Independent Contractor

An individual who provides services to another entity under a contract for services, retaining control over how the services are performed.

Specific Undertaking

A precise commitment or obligation that a party agrees to carry out.

Limited Liability Partnership

A partnership in which some or all partners (depending on the jurisdiction) have limited liabilities, protecting them from the debts of the partnership and other partners' actions.