The commodity substitution bias is that
A)government spending is a good substitute for investment expenditures.
B)national saving and foreign borrowing are interchangeable.
C)consumers substitute more expensive goods for less expensive goods when technology advances.
D)consumers substitute high- quality goods for low- quality goods.
E)consumers decrease the quantity they buy of goods whose relative prices rise and increase the quantity of goods whose relative price falls.

Question

Quizplus · Accepted Answer

The commodity substitution bias refers to the tendency of consumers to decrease the quantity they buy of goods whose relative prices rise and increase the quantity of goods whose relative prices fall. This is the most accurate description of the concept. Choices A, B, C, and D are not related to the definition of the commodity substitution bias.

The Commodity Substitution Bias Is That