Question

Which of the following is not considered one of the potential biases in calculating the consumer price​ index? A. New product bias. B. Increase in quality bias. C. Coverage bias. D. Outlet bias. E. Substitution bias.

Answer 1

Coverage bias is not considered one of the potential biases in calculating the consumer price​ index.

Explanation:

A price index refers to the weighted average in the prices of certain goods or services in certain region at certain time. In the consumer price index calculation, the biases arises from four different sources in which coverage bias  is the major one. There are two price indices such as producer and consumer price index.

In the calculation of the consumer price​ index the potential bias which is a coverage bias can be reduced with BLS. The BLS has collected price information form extended stores number in order to reduce the coverage bias.