The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as ________ bias and results in ________.
A)outlet; the CPI underestimating the true change in the cost of living
B)new product; the CPI overestimating the true change in the cost of living
C)outlet; the CPI overestimating the true change in the cost of living
D)net product; the CPI underestimating the true change in the cost of living

Question

Quizplus · Accepted Answer

New product bias occurs when the CPI does not account for new products quickly enough, potentially overestimating the cost of living since it doesn't reflect the consumer's ability to substitute older, more expensive products with newer, often cheaper or more efficient ones.

The Base Period for CPI Calculations Is Generally 1982-84