Question

In 1972, one could buy a bag of chips, a pound of hamburger, a package of buns, and a small bag of charcoal for about $2.50. If the same goods today cost $6.00, then which pair of CPIs would make the cost in today's dollars the same for both years?a. 65 in 1972 and 156 today

b. 90 in 1972 and 145.8 today
c. 75 in 1972 and 160 today
d. 60 in 1972 and 150 today

Answer 1

a. 65 in 1972 and 156 today

Step-by-step explanation:

The relationship between CPI should be the same as the prices:

price today / price 1972 = CPI today / CPI 1972

6 / 2.50 = 2.4

Now we divide the given CPI and look for the correct answer:

a) 156/65 = 2.4

b) 145.8 / 90 = 1.62

c) 160/75 = 2.1333333

d) 150/60 = 2.5

the first option matches the relationship between prices thus, is the correct one.