Which of the Following Is NOT a Reason as to Why

question 133

Multiple Choice

Which of the following is NOT a reason as to why the CPI may be biased?

• A)The CPI deals with a fixed market basket and doesn't capture the savings households enjoy when they take advantage of sales.
• B)The CPI does not pick up the increase in economic welfare caused by new products entering the marketplace.
• C)The CPI does not adequately deal with changes in the quantity of products purchased over time.
• D)The CPI does not adequately reflect that different consumers have different tastes.

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Definitions:

Elastic

A characteristic of a demand or supply curve which shows a high responsiveness to changes in price.

Inelastic

Refers to a condition in which the demand or supply of a product or service remains largely unaffected by variations in its price.

Pure Monopolist

A market scenario where a single company or entity exclusively controls the entire supply of a particular product or service, without any close substitutes or competition.

Socially Optimal

A condition or outcome that maximizes societal welfare, considering both efficiency and equity among members of society.