Final answer:
Scenarios that introduce new products or significant quality changes in goods can create difficulties in accurately measuring CPI due to quality/new goods bias and substitution bias, complicating the reflection of true living costs.
Step-by-step explanation:
The scenarios that can make it difficult to accurately measure the Consumer Price Index (CPI) include the release of a new product that many consumers adopt, and the substantial increase in the price of a commodity like tickets to a baseball game after a stadium rebuild. These scenarios present challenges like the quality/new goods bias and the substitution bias. Specifically:
- A company releasing a new product that many consumers adopt can introduce the quality/new goods bias because this product wasn't in the past fixed baskets of goods and thus isn't accounted for in the CPI until it's introduced, which can lag behind its widespread adoption.
- The price of a ticket to a baseball game increasing after a stadium is rebuilt illustrates that the CPI does not immediately account for quality improvements and their effect on prices.
Both these issues indicate that changes in quality and the availability of new goods can affect the accuracy of the CPI as a measure of inflation or the cost of living, as they can both lead to underestimation or overestimation of the true living costs.