Samantha goes to the grocery store to make her monthly purchase of ginger ale.As she enters the soft drink section,she notices that the price of ginger ale has been raised by 15 percent,so she decides to buy some peppermint tea instead.Which of the following problems in the construction of the CPI is this situation most relevant to?

Question

Quizplus · Accepted Answer

This situation is most relevant to substitution bias in the construction of the CPI. Samantha chose to buy peppermint tea instead of ginger ale due to the increase in price. This decision reflects the fact that consumers will substitute goods if their prices change, which is not always fully accounted for in the CPI.

Samantha Goes to the Grocery Store to Make Her Monthly