The Difficulty of Measuring the Cost of Living Essay -- Economics

The Difficulty of Measuring the approach of LivingCost of breathing is normaled to measure the salutes of maintaining biographystandards of working- class households. It was first introduced in1914.It is difficult to measure the approach of living because values areconstantly changing, meaning cost of merchandises go away remove too. Prices volition change for instance due to annexs in costs or inflation, so ifa merchant ship coke was $1 in 2000, due to an increase in wage demands, costshave increased and thus the sell price of coke has increased to $2in 2001. This happens to many commodities in the market and as aresult of that it is difficult to measure the price of products asthat are constantly changing over a fulfilment of time.The quality of products also changes, however this will appear on thecost of living index. For instance computers, CD players, televisionsare of better quality straightway than they were before and that is why theirprices have increased. Ho wever only the price of the product will bementioned in the index, not the fact that its quality has been alter. Their propose and performance also changes. So a price changewill accompany the introduction of a tonic model or an improved design.Therefore it is difficult to assess the real nature of the pricechange. An modeling is the price if BMW cars has increased by 10percent, but the quality, performance and design of the parvenue model ismuch better and superior to that of the older model, has the subvalue increased or decreased?Tax also affects the cost of living because changes in indirect taxeswill affect te goods and work we purchase. Taxes will eitherincrease or decrease due to the fluctuate inflation rate. Changes inthe indirect tax... ...uct. This is known as the need forchange and its a psychological aspect more consumers go through. Alsonew products are invented, consumers get curious and want to try themout and this leads to changes in tastes and fashion. This c auses aproblem with weighting.Therefore measuring the cost of living is genuinely difficult, becauseprices change, quality changes, and consumers tastes and fashionchange. Also this is the generation of technology meaning newinventions are being developed faster than any of us can imagine,meaning the cost and living index needs to be updated on a regular basis andmeaning it is not very accurate. Also there are millions of bulk ineach country, how can you possibly know what is the average consumptionhabit? To assume there is one, you must neglect people who dont trainthat criteria meaning, the cost of living guide is inaccurate.