Identify three strengths and three weaknesses of the Consumer Price Index.?

Answer 1

Ignore most of edward's comment. If he actually knew anything about the CPI, then he would know why outsourcing by itself does not affect the measure. And if he knew anything about econometrics, then he would know that the CPI being an estimate of inflation is not a legitimate criticism.

Strengths:
1. it is easy to calculate and interpret.
2. it is measured consistently from period to period and therefore allows for comparison over time.
3. It is measured (more-or-less) objectively.

Weaknesses:
1. It is based on a single basket of goods, which is an appropriate basis- more-or-less- for some individuals, but not necessarily all individuals.
2. It doesn't consider changes in quality.
3. It doesn't account for the substitution effect.
4. The basket is updated infrequently. Thus, the "appropriateness" of the basket erodes over time until it is updated.

Answer 2

It's an approximate.

It does not properly consider imports when they are outsourced at a lower price.

It does not reflect a "decline" in quality of goods, only that the same item retails for the same price as the year before.

All I have. It is erroneous.