With respect to the consumer price index, which of the following does not serve as an example
Question:
With respect to the consumer price index, which of the following does not serve as an example of how the substitution bias arises? Between 2010 and 2011, the price of a pound of peanuts
a. rises from $0.80 to $1.00 while the price of a loaf of bread rises from $2.00 to $2.50.
b. rises from $1.00 to $1.30 while the price of a loaf of bread rises from $2.00 to $2.30.
c. remains constant, while the price of a loaf of bread rises from $2.00 to $2.30.
d. falls from $1.00 to $0.80 while the price of a loaf of bread falls from $2.00 to $1.80.
Explain what the substitution bias is in this regard.
If the answer is A, why is B any different? I'm confused. They're both increasing the prices? How did you know this?
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws