Suppose the price of a substitute to lcd televisions rises. What effect will this have on the market equilibrium for lcd tvs? T
he equilibrium price of lcd tvs will a. Increase and the equilibrium quantity will increase.
b. Not change and the equilibrium quantity will not change.
c. Decrease and the equilibrium quantity will increase.
d. Increase and the equilibrium quantity will decrease.
e. Decrease and the equilibrium quantity will decrease.
Because the CPI is based on a fixed basket of goods, the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living. This is so because when a new good is introduced it gives consumers greater choice thus reducing the amount they must spend to maintain their standard of living.