Suppose the Bureau of Labor Statistics uses Ballpark Franks as the hot dogs used when calculating the consumer price index. During 2012, Oscar Mayer aggressively reduces prices. Consumers respond by purchasing more Oscar Mayer and less Ballpark Franks. The 2012 CPI is likely to
A) understate the average prices paid by businesses.
B) neither understate nor overstate the average prices because some consumers will still buy Ballpark Franks.
C) overstate the average prices paid by consumers.
D) overstate the average prices paid by businesses.
E) understate the average prices paid by consumers.
Correct Answer:
Verified
Q14: The CPI is reported once every
A)quarter.
B)other year.
C)year.
D)week.
E)month.
Q15: An example of the commodity substitution bias
Q16: Consumers in Beachland consume only two goods,
Q17: The CPI was 170 last year and
Q18: In 1970, the CPI was 39 and
Q20: Economists agree that the CPI
A)is a near
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