Which of the following is a bias in the CPI?
I.new goods bias
Ii.index change bias
Iii.commodity substitution bias

Question

Quizplus · Accepted Answer

I. New goods bias occurs when the CPI fails to account for the introduction of new goods to the market, which can result in an upward bias in the index. 
II. Index change bias occurs when the CPI fails to account for changes in the quality of goods and services over time, leading to an inaccurate measure of price change. 
III. Commodity substitution bias occurs when consumers switch to lower-priced goods and services in response to price changes, which is not fully captured by the CPI. This can lead to an upward bias in the index. 
Therefore, both I and III are biases in the CPI.

Which of the Following Is a Bias in the CPI