Question

In 1983, a year-long newspaper subscription cost $12.75. Today, a year-long newspaper subscription costs $28.50. If the CPI is 193, what is the relation of the actual price of a year-long newspaper subscription to the expected price, to the nearest cent? a. The actual price is $14.79 higher than the expected price. b. The actual price is $3.89 higher than the expected price. c. The actual price is $9.20 lower than the expected price. d. The actual price is $11.86 lower than the expected price

Answer 1

Option b - The actual price is $3.89 higher than the expected price.

Explanation:

Given : In 1983, a year-long newspaper subscription cost $12.75. Today, a year-long newspaper subscription costs $28.50. If the CPI is 193

To find : What is the relation of the actual price of a year-long newspaper subscription to the expected price, to the nearest cent?

Solution :

CPI is the consumer price index.

The formula of CPI is

`\text{CPI}=\frac{\text{Cost of newspaper subscription in Given Year}}{\text{Cost of newspaper subscription in Base Year}}* 100`

We have given CPI = 193

Cost of newspaper subscription in Base Year = $12.75

We have to find cost of newspaper subscription in Given Year

`193=\frac{\text{Cost of newspaper subscription in Given Year}}{12.75}* 100`

`\text{Cost of newspaper subscription in Given Year}=(193*12.75)/(100)`

`\text{Cost of newspaper subscription in Given Year}=(2460.75)/(100)`

`\text{Cost of newspaper subscription in Given Year}=24.61`

The actual price of newspaper subscription = $28.50

The expected price of newspaper subscription = $24.61

Now, to find how much higher they expected is

$28.50 -$24.61 = $3.89

Therefore, Option b is correct.

The actual price is $3.89 higher than the expected price.

Answer 2

Based on the CPI, the expected price is
$12.75 * 193/100 = $24.61

The actual price is $28.50 -24.61 = $3.89 more than expected. The appropriate choice is ...
b. The actual price is $3.89 higher than the expected price.