The Chained Consumer Price Index (CPI) Is a Better Measure

question 109

Multiple Choice

The chained consumer price index (CPI) is a better measure of prices than the traditional CPI:

• A) because it contains producer prices, not just consumer prices.
• B) because it adjusts for price changes less frequently but across more goods.
• C) because it adjusts for price changes more often, especially when new goods are introduced, which is important because new products' prices tend to fall soon after introduction.
• D) because the chained index is called "chained" because it includes industrial goods that are not included in the traditional CPI.
• E) because while omitting producer prices, it includes substitution between goods as relative prices change.

Learn the rule for employing inputs in a manner that the marginal product per dollar spent on each is equalized across all inputs.

Analyze how changes in input prices influence firm decisions regarding the mix of inputs used in production.

Understand the implications of technological changes on the demand for different types of labor and capital.

Comprehend the relationship between least-cost combinations of inputs and their impact on a firm's total costs and economic profits.