Consumers begin purchasing houses incorporating steel studs instead of wooden studs after the price of lumber increases. Which problem in the construction of the CPI does this situation best represent?

Question

Quizplus · Accepted Answer

This situation represents substitution bias as consumers are substituting wooden studs for steel studs due to the increase in lumber prices. This shift in consumer preference for steel studs is not reflected in the CPI as it does not account for this type of substitution.

Consumers Begin Purchasing Houses Incorporating Steel Studs Instead of Wooden