In 1984, Allen buys a new stereo system at the Modern technology Hi-Fi store.He is told by the salesman that Mr Steve Jobs Bose has invented a computer that allows you to do complex calculations and word processing in your home.Allen buys an Apple Mac.This purchase illustrates which of the following problems in the CPI's construction?

Question

Quizplus · Accepted Answer

The purchase of a new Apple Mac is an example of both the introduction of new goods and unmeasured quality change in the CPI's construction. The introduction of new goods occurs when new products or services enter the market, which may lead to an increase in consumer choices and a shift in consumer behavior. Unmeasured quality change occurs when the quality of a product improves, but the price remains the same, leading to an overestimation of inflation. In the case of the Apple Mac, it represents a new good that was not previously available on the market, and it also represents an unmeasured quality change since it allowed for complex calculations and word processing compared to previous home computer models.

In 1984, Allen Buys a New Stereo System at the Modern