Landston — the ASSIGNMENT is clear, but this individual’s need for help is not. I want to know what this person needs help with. All he has done is post his assignment. That is not HIS question. Also, had you actually read my entire post, this concept should have been clear to you.

I don’t have the detailed answer I’d like to give.

The answer to the question lies in what consumer items are monitored and their balance in the final index.

1. One weakness would be that the Index might overemphasize and underemphasize certain consumer items. If I’m not mistaken, in the US it underemphasizes gas. But at any rate, it makes a judgement as to what is important. I’ve heard jokes to the effect: “It’s a great index, so long as you don’t like to eat or have to live anywhere.”

2. Another weakness would be that it fails to factor in the fact that the consumer can make switches in purchasing products and services. The consumer might prefer apples to oranges and customarily buy apples, but if oranges are on sale or are cheap, the consumer will make a switch. But the CPI won’t measure that switch.

3. A third weakness is that the CPI doesn’t adequately factor in technological advances that any given product may have over time. Suppose one item on the CPI is television sets. The price of sets over the decades might not have come down, but TV’s today are loaded with features that previous models didn’t have. Thus the value of a TV has been greatly enriched, yet the item is just listed as a “TV.” Look at computers and how they’ve changed over the years. Every three years I buy a new one, and the improvements from model to model are phenominal yet I always pay about the same price, something like a thousand bucks. According to the CPI I’m still using “just a computer,” but please don’t make me go back to that old 15 MHz model with its 5 and a quarter inch floppy!

Edit: To Landston, Free’s comments are not meant to be taken literally, of course the question is clear. The asker wants us to do his/her homework (and you have happily obliged). While she gets to her point by asking for more information under “Add Details” I tend to be more blunt.

Also, in Ireland I don’t think it takes into account mortgage repayments or rent.

Sorry, that’s all that comes to mind at the moment