Question

In 1969, Fritz bought a Ford Mustang for $2,500. If the price index was 36.7 in 1969 and the price index was 180 in 2006, then what is the price of the Ford Mustang in 2006 dollars?

Answer 1

The price of the Ford Mustang in 2006 dollars is approximately $12,159.56.

Step-by-step explanation:

To find the price of the Ford Mustang in 2006 dollars, we need to adjust the 1969 price using the price index. The price index is a measure of how prices have changed over time. We can use the formula:

Price in 2006 dollars = Price in 1969 dollars x (Price index in 2006 / Price index in 1969)

Plugging in the values, we get:

Price in 2006 dollars = $2,500 x (180 / 36.7) = $12,159.56

Therefore, the price of the Ford Mustang in 2006 dollars would be approximately $12,159.56.