The basic income will provide only the basics - if you want luxuries, you will still need a job.
This idea seems to be built on a notion that there are needs and that their are wants, and that we are only going to give enough to supply needs. But there are two major underlying problems with this.
First, even if we assume that needs and wants exist, you aren't going to have agreement on what falls in what category. For starters, is having children a need or a luxury? Is a clean place to live a need or a luxury? Is having a healthy food a need or a want?
Second, I'm not sure the division between needs and wants is even real. Yes, you'll die without food in a few weeks, die without water in a few days, and die without air in a few minutes, but what about something that increases ones likelihood of dying in a few years, but not any shorter? For example, a starving person can survive off a very poor diet for a much longer time than with no diet, but if they are missing vital nutrients, they will still eventually die. Or look at loneliness and the negative effects it has on people. You won't die within a year from lack of human contact, but your overall life expectancy will drop greatly (except for infants, who will die from lack of human contact, as shown in a few experiments which scientists are ethically banned from reproducing).
Note that it is not merely a question of competition of perfect substites. An apartment competes with a house, but also with a shared apartment, with living with family, with leaving the area. And note that a Basic Income quite directly increases the supply of "housing near some source of income".
In the second scenario, he receives BI, but the same market forces would apply and he would only be able to charge more as long as there are no competitors. Additionally, since everyone will receive BI this will grant people more potential free time. Time they could use to make their own bread in case the baker raises prices. In this scenario the baker would have less incentive to work but would also have more potential competition in case he raises the prices.
Remember, part of demand is the amount people are willing and able to pay.
Overall, I'd argue that by increasing a person's ability to pay for anything you increase their ability to walk away from all kinds of bad deals. One of the best examples of this is given by Terry Pratchett:
The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.
A beef carcass might have 500 pounds of meat on it, but only 5-10lbs of that is tenderloin. If we all have enough money to buy tenderloin it doesn't immediately follow that cows are then made up of nothing but tenderloin. So the price of tenderloin will go up until the demand balances the supply again. You can take this and apply it nearly anywhere in the economy and find it'll be approximately correct for a great many situations.
And there's the rub. Even if we could make 500lb all-tenderloin cattle you wouldn't see people buying hundreds of pounds of beef tenderloin for themselves every day. Billionaries like Bill Gates can already afford millions of pounds of tenderloin yet you don't see him eating that.
Basic income might cause the price of tenderloin to go up a little bit but so what? It's not going to do anything to the price of corn or rice or wheat. Maybe the price of an apartment in Manhattan will go up a little bit (I doubt it) but not a house in rural Wisconsin.
First off, we can't make an all tenderloin cow. And second, that's the problem! If filet cost 1/4 of what it did now consumption might go up 100x. And obviously, it can't. But people would try. Until the price went up enough that the market for tenderloin started to clear again. But people have this extra money, right? So they can afford to spend more on hamburger. Congrats, we've raised prices!
Look at the headlines about solar panels! Demand for solar panels is much higher today than it was 20 years ago and yet prices are dramatically lower.