Product Innovation

question 95

Multiple Choice

Product innovation:

• A) presents a problem when calculating the CPI because the market basket is fixed.
• B) causes the basket of goods used to calculate CPI to be updated immediately.
• C) causes the CPI to be overestimated, because it makes goods more expensive.
• D) isn't factored into the CPI at all.

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Definitions:

Net Income

The net income of a company, which is the amount remaining after deducting all costs and taxes from its total revenue.

Operating Expenses

The ongoing costs incurred in the operation of a business, excluding the cost of goods sold.

Periodic Inventory System

An inventory system where the inventory count is updated and cost of goods sold is calculated at specific intervals, not continuously.

Purchase Returns and Allowances

Concessions granted by sellers to buyers, involving the return of goods or issuance of allowances for unsatisfactory products or services.