Question

a pair of jeans cause $14.99 in 1973 when the CPI was 135 what would the price of the jeans have been in 1995 if the CPI was 305 ?

Answer 1

We have that in 1973, when the CPI was 135, that the price of jeans was $14.99.

In 1995, when the CPI was 305 and assuming that the price goes along with inflation, the jeans should have costed:

`\begin{gathered} P_(95)=P_(93)\cdot\frac{\text{CPI}_(95)}{\text{CPI}_(73)} \\ P_(95)=14.99\cdot(305)/(135) \\ P_(95)=14.99\cdot2.259 \\ P_(95)\approx33.87 \end{gathered}`

Answer: the price in 1995 was expected to be $33.87 (option C).