The more expensive commodities are overly influential in an unweighted aggregate price index.

Question

Quizplus · Accepted Answer

In an unweighted aggregate price index, such as the consumer price index (CPI), each commodity is given an equal weight regardless of its price. Therefore, more expensive commodities have a larger impact on the overall index. For example, if the price of housing increases significantly, it will have a greater impact on the CPI compared to a smaller increase in the price of a less expensive commodity such as clothing.

The More Expensive Commodities Are Overly Influential in an Unweighted