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
A company has a cash ratio of 2.3. what does this imply?
Answers (1)
A working capital managers role is to manage: Select one: a. accounts receivable and payable only. b. cash, inventory, accounts receivable, accounts payable and risk management. c. cash and inventory only. d. inventory and accounts receivable only.
Answers (1)
You are the project manager for Fun Days Vacation Resorts. Your new project assignment is to head up the Fun Days resort opening in Austin, Texas.
Answers (1)
Water is leaking from an ice machine onto the sidewalk what is the best way to prevent an accident select all that apply
Answers (1)
A company currently has 200,000 shares issued and 190,000 shares outstanding. If the company purchases 20,000 shares of treasury stock, what amount of shares will be outstanding?
Answers (1)
New Questions in Business
Richard hires Paul to paint his kitchen in two eight-hour days of work for $500. At the end of the first day, the kitchen is 85 percent complete. Richard asks Paul to stay late and finish.
Answers (1)
A manager demonstrates when he listens carefully to his subordinates and works to build trusting relationships.
Answers (1)
On March 1, 2017, Boyd Company acquired real estate, on which it planned to construct a small office building, by paying $80,000 in cash.
Answers (1)
A. Assume that the risk-free rate is 8 percent, the required rate of return on the market (or an average-risk stock) is 13 percent, and the required rate of return on Acme Healthcare stock is 15 percent.
Answers (1)
taxes: a. are unlikely to affect market supply and demand b. are copmulsory payments to governments c. never affect efficiency in the allocation of resourcesd. are voluntary payments to governments
Answers (1)
Home » Business » What are the three effects that bias the measurement of CPI
Sign Up Forgot Password?