The Base Period for CPI Calculations Is Generally 2002

question 173

Multiple Choice

The base period for CPI calculations is generally 2002.In 2014, 55% of Canadians had a smartphone, but in 2002 almost no one had a smartphone.This potential for bias in the CPI is referred to as ________ bias and results in ________.

• A)outlet; the CPI underestimating the true change in the cost of living
• B)new product; the CPI overestimating the true change in the cost of living
• C)outlet; the CPI overestimating the true change in the cost of living
• D)new product; the CPI underestimating the true change in the cost of living
• E)substitution; the CPI underestimating the true change in the cost of living

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Definitions:

Fixed Cost

Expenses that do not change with the level of goods or services produced over the short term, such as rent, salaries, and insurance.

Holding Cost

The expenses incurred for storing and maintaining inventory, including warehousing, insurance, and depreciation costs.

Monthly Demand

The total quantity of a product or service that consumers are willing and able to purchase within a calendar month.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on market conditions, customer characteristics, or the nature of the purchase.