Question

The median price, P, of a home rose from $50 thousand in 1980 to $150 thousand in 2000. Let t be the number of years since 1980. If instead the housing prices increased exponentially, find an equation of the form P = Poa t to represent housing prices. Again, P is measured in thousands. (Round your answer for a to 6 decimal places.)

Answer 1

Answer:
`P=50,000(1.056467)^t`

Explanation:

Here the function that shows the price of home after t years,

`P=P_0(a)^t`

Where,

`P_0` is the initial price of home,

a is the growth factor,

t is the time.

Here, The Initial price of home,

`P_0 = $ 50,000`

P = $ 150,000

Time since 1980, t = 20 years.

Thus,
`150,000=50,000(a)^(20)`

`3=(a)^(20)`

`a=(3)^(1/20) =1.05646730855\approx 1.056467`

Thus, the complete function that shows the price of home after t years,

`P=50,000(1.056467)^t`

Answer 2

150,000 = 50000a^20
a^20 = 150000/50000 = 3
a = 20th root of 3 = 1.056467

Required equation is P = 50000(1.056467)^t