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.
Answer: D
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The winner in a first-price sealed-bid auction pays an amount equal to ________
A) his bid B) the second-highest bid C) half of his bid D) the lowest bid
Compare the consumer surplus, producer surplus, and deadweight loss that arise from average cost pricing with those that arise from profit-maximization pricing and marginal cost pricing
What will be an ideal response?