The substitution bias refers to:

A. the failure of the Lespeyres index to capture a consumer's tendency to purchase the same bundle of goods as prices change.

B. the substitution effect is positive for a price increase.

C. the substitution effect is negative for an inferior good.

D. the failure of the Lespeyres index to capture a consumer's tendency to substitute away from goods that have become more expensive.


D. the failure of the Lespeyres index to capture a consumer's tendency to substitute away from goods that have become more expensive.

Economics

You might also like to view...

Refer to Figure 5-3. The efficient quantity of medical services is

A) 400. B) 800. C) 1,200. D) > 1,200.

Economics

According to the Black-Scholes formula:

a. the value of an in-the-money option will equal the difference between the stock's current price and the strike price. b. the payoff from an average option is either a multiple or a power of the difference between the strike price and the price they are exercised at. c. the holder of a basket option has the right to buy or sell the underlying at the highest price it has attained over the life of the option. d. the price of a call or put option varies with the price of the underlying asset.

Economics

What do economies of scale, the ownership of essential raw materials, and patents have in common?

A. They must all be present before price discrimination can be practiced. B. They are all barriers to entry. C. They all help explain why a monopolist's demand and marginal revenue curves coincide. D. They all help explain why the long-run average cost curve is U-shaped.

Economics

When the principle of comparative advantage determines trade, then a country will

A) specialize only in that good with the highest opportunity cost. B) specialize only in goods with the lowest opportunity costs. C) specialize only in that good where output is less per worker hour than another country. D) specialize only in that good where production costs are more than average total costs.

Economics