Assume That Consumers Consider Rice and Potatoes to Be Substitutes,so

question 62

Multiple Choice

Assume that consumers consider rice and potatoes to be substitutes,so that when the price of rice rises,consumers purchase less rice and more potatoes.When the CPI is computed following the increase in the price of rice,it takes into account

• A)the increase in the price of rice.
• B)the decrease in the quantity of rice purchased and the increase in the quantity of potatoes purchased.
• C)Both (a)and (b)are correct.
• D)None of the above is correct.