Ask Question
BusinessBusiness
22 September, 09:41

What are the three effects that bias the measurement of CPI

+2
Answers (1)
  1. 22 September, 11:15
    0
    Answer: Consumer price index (CPI) is weighted price index of basket of good that a consumer purchases each month. CPI is fixed in nature. It is an economic indicator. A rise in CPI indicates consumer inflation rate. The are type of bias that effects the measurement of CPI are: substitution bias, quality bias and outlet bias.

    Explanation: Following are the bias:

    Substitution Bias - it arises when prices in the consumer basket increases and consequently low price alternatives or substitutes are opted by the consumer. As we know CPI is fixed-weight price index so the impact is not predicted accurately. Quality bias - It arises when any increase in technology increases the quality life of a product. Constant change in the quality of the product again does not reflect in consumer price index. Outlet bias - consumer shifts to new places or outlets as per their taste and preferences which is again not well represented by the CPI.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “What are the three effects that bias the measurement of CPI ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Officials at bp and the company itself faced heavy fines, as well as civil and criminal suits. this type of legal and financial jeopardy is an example of what type of control?
Answers (1)
When contemplating a product deletion, a firm studies customer migration patterns to determine: the profit contribution of the product to the firm. whether the product has outgrown its usefulness.
Answers (1)
Show that any second-order Markov process can be rewritten as a rst-order Markov pro - cess with an augmented set of state variables. Can this always be done parsimoniously, i. e.
Answers (1)
If a financial portfolio manager in the u. s. buys british company stocks in the london stock exchange, this would involve:
Answers (1)
Identify which writing characteristic of business messages is violated in the following description. I see that there appears to be an absolutely unfamiliar potential client requesting to converse with you in the upcoming afternoon interval.
Answers (1)
New Questions in Business
Kane Company's employees earn vacation time at the rate of 1 hour per 40-hour work period. The vacation pay vests immediately (that is, an employee is entitled to the pay even if employment terminates).
Answers (1)
Digg Co. installs a manufacturing machine in its factory at the beginning of the year at a cost of $36,000. The machine's useful life is estimated at 10 years, or 300,000 units of product, with a $6,000 salvage value.
Answers (1)
Which of the following actions will likely cause a project to fail? A) dedicating valuable team member time to identify risk events B) spending project funding to procure needed tools and spare parts C) unclear or conflicting stakeholder
Answers (1)
Mcgregor company allows customers to pay with credit cards. the credit card company charges mcgregor 2% of the sale. when a customer uses a credit card to pay mcgregor $300 for services provided, mcgregor would:
Answers (1)
Net worth is the difference between a firm's assets and its liabilities. a. True b. False
Answers (1)
Home » Business » What are the three effects that bias the measurement of CPI
Sign Up Forgot Password?