Which of the following is an example of monopolistic competition?

A. The local electricity company

B. Fast food restaurants in a food court

C. A farmer s market

D. Two grocery stores in a small town

Why does the consumer price index (CPI) overstate inflation?

A. Its estimates are known to be inaccurate

B. It fails to account for income changes of consumers

C. It fails to account for substitution effects between bundles

D. It fails to measure the difference between working and retired consumers