How to calculate the a price index, Microeconomics

Assignment Help:

Why does a price index based on constant weights tend to overstate inflation in periods after the base year when the price of one good is rising quickly compared to other goods?

Because people tend to buy cheaper substitutes instead of the good whose price is quickly increasing.  But the constant-weight index includes the similar quantities of the expensive goods.

 


Related Discussions:- How to calculate the a price index

Microeconomics, when the demand function is 2q-24+3p=0,find marginal revenu...

when the demand function is 2q-24+3p=0,find marginal revenue when q=3

Cost Minimization for Cobb-Douglas, 3.Cost Minimization for Cobb-Douglas. S...

3.Cost Minimization for Cobb-Douglas. Suppose the Acme Gumball Company has the produc- tion function of q=LK. Given that the MPL=K, MPK=L and MRT S=MPL/MPK. Part a-b, we are anal

Illustrate marginal utility of the variable commodity , As a consumer incre...

As a consumer increases the consumption of any one commodity, marginal utility of the variable commodity must eventually decline."Illustrate the statement. Illustrate law of dem

Explain features of outward-oriented and inward-oriented, The main features...

The main features of outward-oriented and inward-oriented development strategies. Inward- oriented as focus on reducing domestic reliance on imports by executing high barrier

Baumol theory, appraise baumol`s sales revenue maximazation theory as an al...

appraise baumol`s sales revenue maximazation theory as an alternative of the firm

Base case NPV analysis , How base case NPV analysis is applied in financial...

How base case NPV analysis is applied in financial risk management

Competitive firm, The Competitive Firm - Price taker - Market ou...

The Competitive Firm - Price taker - Market output (Q) and firm output (q) - Market demand (D) and firm demand (d) - R(q) is straight line Demand and Marginal Re

Cost, explain the traditional theory of cost with suitable diagrams.explain...

explain the traditional theory of cost with suitable diagrams.explain why LAC curve is not U shaped?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd