A commodity substitution bias ______ when the CPI is calculated in 2019 using the 2018 basket. The reason is that ______ A. exists; people switch from the relatively more expensive hot dogs to the relatively less expensive burgers B. exists; over time preferences change and people prefer to eat burgers rather than hot dogs C. does not exist; burgers and hot dogs are not substitutes D. does not exist; the CPI market basket is updated frequently to eliminate substitution bias
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Step 1: The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Show more…
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