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

question 63

Multiple Choice

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?

• A) It should keep the CPI unchanged, because the price has not changed.
• B) It should decrease the CPI, because better quality means lower maintenance costs.
• C) It should increase the CPI, because higher quality means higher value.
• D) It should keep the CPI unchanged, because lower maintenance costs are offset by higher value.

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