An example of the new goods bias in the CPI is the
A) introduction of hybrid automobiles, vehicles that were not made until recently.
B) decreasing popularity of SUVs as the price of gasoline has risen.
C) switch from traditional car dealerships to low-cost Internet car buying services.
D) introduction of higher quality brakes as standard equipment on new cars.

Question

Quizplus · Accepted Answer

The introduction of hybrid automobiles is an example of the new goods bias because it is a new product that is not included in the CPI until it becomes more widely used and replaces other goods.

An Example of the New Goods Bias in the CPI