Suppose the Bureau of Labor Statistics Uses Ballpark Franks as the Hot

question 14

Multiple Choice

Suppose the Bureau of Labor Statistics uses Ballpark Franks as the hot dogs used when calculating the consumer price index.During 2010, Oscar Mayer aggressively reduces prices.Consumers respond by purchasing more Oscar Mayer and less Ballpark Franks.The 2010 CPI is likely to

• A) overstate the average prices paid by consumers.
• B) overstate the average prices paid by businesses.
• C) understate the average prices paid by consumers.
• D) understate the average prices paid by businesses.
• E) neither understate nor overstate the average prices because some consumers will still buy Ballpark Franks.