When Constructing a Weighted Aggregate Price Index, the Weights Usually

question 68

Multiple Choice

When constructing a weighted aggregate price index, the weights usually are _____.

• A)prices of substitute items
• B)prices of complementary items
• C)quantities of the respective items
• D)squared quantities of the respective items
• E)quality of individual items

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Definitions:

Revealed Preference

A theory suggesting consumers' preferences can be inferred from their purchasing habits.

Prices

Monetary values assigned to goods and services in a market, determining how resources are allocated among consumers and producers.

Weak Axiom

A less stringent rule or principle that is accepted as valid, often used in economic theories to make assumptions about consumer behavior.

Revealed Preference

An economic concept suggesting that the choices consumers make reflect their preferences, assuming that their decisions will maximize their satisfaction.