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DENIUS [597]
3 years ago
15

By not taking into account the possibility of consumer substitution, the CPI

Business
1 answer:
algol [13]3 years ago
7 0

Answer:

(B) overstates the cost of living.

Explanation:

By not taking into account the possibility of consumer substitution, the CPI

overstates the cost of living.

This one of the limitations of the CPI which is Consumer product index.

CPI is the weighted index of goods purchased by consumers. It does not take into account the availibilty of substitute goods in market and hence over estimates the living cost.

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