Answer:
d. substitution bias.
Explanation:
Price changes from year to year are not proportional, and consumers respond to these changes by altering their spending patterns. The problem this creates for inflation calculations is called substitution bias.
A problem with the Consumer Price Index (CPI) arises from the singular fact that, when the price level of a product becomes relatively less expensive or lower, consumers tend to buy more quantity of the product and consequently, a lesser quantity of goods that are relatively more expensive.
Hence, their spending pattern changes with respect to the prices but it's not completely adjusted with the Consumer Price Index (CPI), thus, making the inflation rate to differ because of the problem of substitution bias.
Answer: . two-stage area
Explanation:
In two-stage specimen sampling, a simple random sample of specimen is selected and then a simple random sample is selected from the units in each sampled specimen. Two-stage sampling is used when the sizes of the specimens are large, making it difficult or expensive to observe all the units inside them.
Answer:
It would be wise to use the CAPM capital cost.
Explanation:
It should use the Capital Assets Pricing Model.
The market rate is not sufficient. It is included in the CAPM calculation to asses the impact in the firm or industry beta and the free-risk rate.
The return for the dividend grows model is calculated with the current stock price and expected dividends. We can't know for sure if the stock wasn't undervalued or overrated at the moment of solving for return.
The CAPM model takes consideration of the current market interest rate, the own non-diversifiable risk of the firm and the fact of a free-risk interest rate. It is the better option
All economic systems must answer the 3 basic questions:
1. What goods and services will be produced
2. How will the goods and services be produced?
3. Who will consume the goods and services?
