The "New Product Bias" in the Consumer Price Index Refers

question 2

Multiple Choice

The "new product bias" in the consumer price index refers to the idea that

• A)consumers switch to new goods when the prices of old goods increase,and the CPI overestimates the cost to consumers.
• B)consumers switch to old goods when the prices of new goods increase,and the CPI underestimates the cost to consumers.
• C)consumers prefer new goods,even if they are worse in quality than old goods,and this causes the CPI to underestimate the cost to consumers.
• D)new products' prices often decrease after their initial introduction,and the CPI is adjusted infrequently and overestimates the cost to consumers.

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Definitions:

Telephone Surveys

A research method in which data is collected from respondents over the telephone to gather information on various topics.

Observational Study

A study where researchers observe and record behavior or outcomes without intervention to understand relationships between variables.

Variables Controlled

In experiments, these are the factors that researchers keep constant to prevent them from influencing the outcome of the study.

Confounding Variable

An external variable that influences both the dependent and independent variables, making the relationship between them less clear.