Which of the Following Is a Reason Why the Consumer

question 116

Multiple Choice

Which of the following is a reason why the Consumer Price Index (CPI) is not calculated as a simple average of all prices?

• A) Some goods experience large price changes and the CPI would be too variable if computed by a simple average.
• B) Goods differ in their importance in the average consumer's budget.
• C) Some goods never experience price changes and the CPI would not be variable enough if computed as a simple average.
• D) It would be difficult to compute a price index using a simple average of all prices.
• E) Actually,the CPI is a simple average of all prices.