Web Analytics
goodhands2u
Answered

The prices of consumer goods do not always exactly follow the CPI. The following chart shows several consumer items, along with their respective prices in 1983 and today.


Item


Price in 1983 ($)


Current Price ($)



Pair of boots


67.45


126.85



Hair dryer


15.25


29.95



Box of tissues


1.15


2.25



Toaster


22.85


44.25


Using the prices shown on this chart, which of the following is a reasonable estimate of the current CPI?




A

208


B

195


C

180


D

173



Verified Answer :

Answer:

b. 195

Step-by-step explanation:

Given :

Item                   Price in 1983 ($)                            Current Price ($)

Pair of boots             67.45                                       126.85      

Hair dryer                 15.25                                         29.95

Box of tissues          1.15                                            2.25

Toaster                    22.85                                         44.25

Solution :

Using formula for CPI (IN %) = (CURRENT PRICE/ OLD PRICE )100

For Pair of boots :

CPI = (126.85/ 67.45 )100 = 188.06

For Hair dryer

CPI = (29.95/ 15.25 )100 =196.39

For Box of tissues:

CPI = (2.25/1.15 )100 = 195.65≈195

For Toaster  

CPI = (44.25/22.85 )*100 = 193.65

Thus , the reasonable estimate of current CPI is 195

cristiansanchez14151

Option (B): 195

on edge.