The Substitution of One Good for Another by Consumers

question 110

Multiple Choice

The substitution of one good for another by consumers:

• A) due to price changes is captured by the CPI.
• B) due to changes in tastes/preferences is captured by the CPI.
• C) is captured by the CPI.
• D) is not captured by the CPI.

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Definitions:

Fuel-efficient Cars

Vehicles designed to use less fuel for traveling the same distance compared to standard vehicles, reducing operating costs and environmental impact.

Tax

A mandatory financial charge or other type of levy imposed by a government on individuals or businesses to fund public expenditures and services.

Incentive

A factor, either monetary or non-monetary, that motivates or encourages an individual or group to perform certain actions or behave in a specific way.

Trade

The exchange of goods and services between different parties, often involving the transfer of money and can occur within or across borders.