The "new product bias" in the consumer price index refers to the idea that
A)consumers switch to new goods when the prices of old goods increase,and the CPI overestimates the cost to consumers.
B)consumers switch to old goods when the prices of new goods increase,and the CPI underestimates the cost to consumers.
C)consumers prefer new goods,even if they are worse in quality than old goods,and this causes the CPI to underestimate the cost to consumers.
D)new products' prices often decrease after their initial introduction,and the CPI is adjusted infrequently and overestimates the cost to consumers.

Question

Quizplus · Accepted Answer

The "new product bias" occurs because new products often decrease in price after their introduction, but the CPI may not be adjusted frequently enough to reflect these lower prices, leading to an overestimation of the cost to consumers.

The "New Product Bias" in the Consumer Price Index Refers