When the price of broccoli increase relative to cauliflower, people who buy fresh vegetables respond by buying more cauliflower and fewer broccoli. As a result, the CPI has
A) a quality change bias.
B) a new price bias.
C) a commodity substitution bias.
D) an outlet substitution bias.
E) a new goods bias.
Question 2
A surplus of labor is eliminated by ________ in the real wage rate and a shortage of labor is eliminated by ________ in the real wage rate.
A) an increase; a decrease
B) a decrease; an increase
C) an increase; an increase
D) a decrease; a decrease
E) None of the above answers is correct because shortages and surpluses are eliminated by changes in the demand for labor and the supply of labor, not the wage rate.
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