Suppose the Quality of Lawn Mowers,which Are Part of the CPI

question 22

Multiple Choice

Suppose the quality of lawn mowers,which are part of the CPI basket,has improved,while their price has remained the same.If Statistics Canada wants to adjust the CPI so that the effect of better quality on the cost of living is accounted for,what should Statistics Canada do?

• A) It should keep the CPI unchanged,because the price has not changed.
• B) It should decrease the CPI,because better quality means lower maintenance costs.
• C) It should increase the CPI,because higher quality means higher value.
• D) It should keep the CPI unchanged,because lower maintenance costs are offset by higher value.

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Definitions:

Freight-Absorption Pricing

A pricing strategy where the seller absorbs all or part of the freight charges to attract customers from distant locations.

Mississippi River

A major North American river that flows southward from northern Minnesota to the Gulf of Mexico, serving as a critical waterway for transportation and commerce.

FOB Factory

FOB Factory, or Free on Board Factory, is a pricing term that indicates the buyer takes responsibility for goods once they leave the seller's premises.

Neiman Marcus

is a luxury department store chain in the United States known for its high-end clothing, accessories, and home furnishings.