In 1986, an Apple IIe computer with 65 kilobytes of memory cost around $1 500. Today, a $1 500 iMac computer (also made by Apple)comes with 8 gigabytes of memory. This illustrates the potential for what kind of bias in CPI calculations?
A)new product bias
B)substitution bias
C)increase in quality bias
D)outlet bias

Question

Quizplus · Accepted Answer

This illustrates an increase in quality bias, as the price of a computer has not increased significantly over time, but the amount of memory and other features have greatly improved, resulting in a higher quality product for the same price.

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