In 1986,an Apple IIe computer with 65 kilobytes of memory cost around $1500.Today,a $1500 iMac computer (also made by Apple)comes with 4 gigabytes of memory.This illustrates the potential for what kind of bias in CPI calculations?

Question

Quizplus · Accepted Answer

This illustrates an increase in quality bias, where the price of a product increases due to its improved quality, rather than an increase in the general level of prices. This can lead to an overestimation of inflation if not properly accounted for in CPI calculations.

In 1986,an Apple IIe Computer with 65 Kilobytes of Memory