I was studying Microeconomics from Microeconomics by Pindyck and Rubinfeld where it was written that CPI calculated on Laspeyres index has overstated the cost of living for consumers who use computers extensively. I am unable to understand this fact.

Now since the price of computers has decreased significantly, the numerator in LI gets reduced because of the same. And because the change in the numerator and denominator is just of the prices of various commodities used, the whole fraction as a whole must decrease. Then how does the index overstate the cost of living?


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