With Respect to the Consumer Price Index,the Substitution Bias Arises

question 190

Multiple Choice

With respect to the consumer price index,the substitution bias arises because

• A)prices of goods and services do not change in the same proportion from year to year.
• B)consumers are slow to adjust their buying patterns from year to year in response to price changes.
• C)consumers are eager to buy new products as they are introduced,despite their lack of full information about the quality of those products until they buy and use them.
• D)All of the above are correct.

---

Definitions:

High-Low Method

An accounting technique used to estimate the fixed and variable components of a cost based on the highest and lowest activity levels.

Least-Squares Regression

A statistical method used to determine the line of best fit by minimizing the sum of the squares of the vertical distances of the points from the line.

Least-Squares Regression

A statistical method used to determine the best-fitting line through a set of points, minimizing the sum of the squares of the distances of the points from the line.

Statistical Evidence

Data collected and analyzed for the purpose of supporting a conclusion or hypothesis.