The CPI Is Biased Because It

question 102

Multiple Choice

The CPI is biased because it

• A)does not include services.
• B)accurately measures the cost of living but not the cost of producing.
• C)does not always take into account the changes in product quality.
• D)takes into account the changes in product quality.
• E)takes into account the changes in technology.

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Definitions:

Direct Labor-Hours

The cumulative amount of time employees spend specifically on the creation of goods or services.

Variable Overhead

Costs that fluctuate with production volume, such as utilities or indirect materials, which are not directly tied to any single product.

Direct Materials

Basic substances that can be directly linked to the manufacture of particular products or services.

Direct Labor-Hours

A measure of the amount of time workers spend on a particular job or production process, used to assign labor costs to units of output.