If There Is an Increase in the Price of Apples

question 49

Multiple Choice

If there is an increase in the price of apples which causes consumers to purchase fewer kilograms of apples and more kilograms of oranges, the CPI will suffer from

• A) Consumer preference bias.
• B) Substitution bias.
• C) Base year bias.
• D) Bias due to unmeasured quality change.
• E) Bias due to the introduction of new goods.

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Definitions:

Price Of Capital

The cost of utilizing capital or funds in the production of goods or services, often expressed as an interest rate.

Slope

In mathematics, the steepness or incline of a line on a graph, representing the rate of change of variables.

Isocost

Represents lines on a graph showing combinations of inputs that cost the same amount.

Capital

Capital refers to financial assets or the financial value of assets, such as cash and buildings, used by a business to produce goods and services.