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 problem in the construction of the CPI is this situation most relevant to?

Question

Quizplus · Accepted Answer

This situation is most relevant to substitution bias because Samantha substituted ginger ale with peppermint tea due to the increase in the price of ginger ale. Substitution bias occurs when consumers substitute cheaper goods for more expensive ones, leading to a potential overestimation of the inflation rate if the CPI does not account for this substitution.

Samantha Goes to the Grocery Store to Make Her Monthly