Which of the following statements is (are) correct?
(x) One problem with the consumer price index stems from the fact that, over time, consumers tend to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. This problem is called substitution bias.
(y) By not taking into account the possibility of consumer substitution, the CPI understates the cost of living.
(z) Suppose the typical consumer buys more bananas than oranges. In fixing the basket of goods and services for the purpose of calculating the consumer price index, the Bureau of Labor Statistics places more weight on the price of bananas than on the price of oranges since the weights of the two prices are determined by surveying consumers.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

X: A major problem with the CPI is that it too static and the basket of goods repeats year after year, but people tend to not buy the same things year after year. When the economy is not doing well, people search for cheaper alternatives, when the economy is doing great, people tend to buy higher quality products. The CPI cannot be adjusted every single year, or else it couldn't be used to compare price changes year after year, and that is exactly its greatest weakness.

Z: The basket of goods should be weighted depending on consumer preferences. For example, if people buy more chicken that beef, then chicken should have a relatively higher weight in the CPI basket.