The presence of new goods that are of higher quality than the old goods leads th

Question

The presence of new goods that are of higher quality than the old goods leads the BLS to update the market basket every time a new good is available. do nothing because at least some people still buy the old goods. try to separate price differences from improvements in quality. actually understate the cost of living when calculating the CPI. immediately update the reference base period used in calculating the CPI. An increase in capital brings a large increase in output at a quantity of capital and a small increase in output at a quantity of capital because of. small, large, increasing returns along the productivity curve small, large, diminishing returns along the productivity curve large, small, diminishing returns along the productivity curve. large, small, increasing returns along the productivity curve. large, small the greater the quantity of capital the greater the output.

Explanation / Answer

35.

Try to separate price differences from improvements in quality.

CPI is calculated based on separate market basket. Each basket must have different price. Since the higher quality goods are in the market, their prices must be high. BLS should try to separate those prices from the prices of old goods.

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