Suppose the quality of lap-top computers, which are part of the CPI basket, has improved, while their price has remained the same. If Statistics Canada wants to adjust the CPI so that the effect of better quality on the cost of living is accounted for, what should Statistics Canada do?

Question

Quizplus · Accepted Answer

Better quality in laptops, while prices remain the same, implies that consumers are getting more value for their money, which effectively reduces the cost of living related to that item. This is because better quality often leads to lower maintenance and longer lifespan, making the product more economical over time. Therefore, to accurately reflect the cost of living, the CPI should be adjusted downwards.

Suppose the Quality of Lap-Top Computers, Which Are Part of the CPI