Good X was sold for $30.00 in 1957. The CPI in 1957 was 27.6 and the CPI in 2006 was 201.6. What was the price of good X in 2006?Group of answer choices$266.67$219.13$410.71$292.17
Question
Good X was sold for 266.67410.71$292.17
Solution
To find the price of good X in 2006, we need to adjust the 1957 price for inflation. This can be done using the Consumer Price Index (CPI) values for the two years and the formula:
Price in 2006 = Price in 1957 * (CPI in 2006 / CPI in 1957)
Substituting the given values into the formula:
Price in 2006 = $30.00 * (201.6 / 27.6)
Calculate the value inside the brackets first:
= $30.00 * 7.304347826
Then multiply $30.00 by the result:
= $219.13
So, the price of good X in 2006 was $219.13.
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