Question

The problems faced in the construction of consumer price index are _____.

• A. Difference in production prices from one location to another
• B. Difference in the standards of living across different classes of society
• C. Difference in expenditure proportion across consumers
• D. All of the above

Answer 1

Answer: (B), (C)

The correct options are
B

Difference in the standards of living across different classes of society

C

Difference in expenditure proportion across consumers

The pattern of consumption varies according to the class of the society hence, it poses a problem in the framing of one index representing all strata of society. Also, the amount spent on different items and commodities vary for each person and thus the different ratio of expenses incurred.