Question

In 1969, malcolm bought a pontiac firebird for $2,500. if the price index was 36.7 in 1969 and the price index was 235 in 2013, then what is the price of the firebird in 2013 dollars?

Answer 1

To find the price of a 1969 Pontiac Firebird in 2013 dollars, multiply the original price by the ratio of the price indices from 2013 to 1969. The adjusted price would be approximately $15,998.75.

Step-by-step explanation:

To adjust the price of the 1969 Pontiac Firebird to 2013 dollars, we can use the price index from both years. Firstly, calculate the ratio between the 2013 price index and the 1969 price index to determine how much the general price level has increased.

The formula for calculating the price in 2013 dollars is:

Price in 2013 dollars = (Price in 1969 dollars) × (Price index in 2013) / (Price index in 1969)

Substituting the given numbers into the formula:

Price in 2013 dollars = $2,500 × (235 / 36.7)

This gives us:

Price in 2013 dollars = $2,500 × 6.3995

Price in 2013 dollars = $15,998.75

Therefore, the 1969 Pontiac Firebird, when adjusted for inflation to 2013 dollars, would cost approximately $15,998.75.

Answer 2

consumer price index = (current price 2013/ base price 1969) x 100
where:
consumer price index2013 = 235
base price 1969 = $2500

Solution
current price 2013 = (consumer price index /100) x base price 1969
current price 2013= (235/100)x $2500
current price = $5875

The price of pontiac firebird in 2013 is $5875.