In 1995 the CPI for all items was 152.4. Find the price in 1995 of a typical item that had an average price of $5 during the years 1982 to 1984.
If the baseline (100) period for the CPI is 1982-1984, then the typical price of a $5 item at that time would be 5 x 1.524 = $7.62 in 1995.
To find the price in 1995 of a typical item that had an average price of $5 during the years 1982 to 1984, we need to use the Consumer Price Index (CPI) to adjust for inflation.
The CPI measures the average change in prices over time for a fixed basket of goods and services. It allows us to compare the purchasing power of a dollar in different years.
Here's how you can find the price in 1995:
Step 1: Calculate the inflation rate from 1982 to 1995.
- Find the CPI for the year 1982 and the CPI for the year 1995.
- The CPI for 1982 was not provided, so we'll assume it was 100 (a common base year value).
- The CPI for 1995 was given as 152.4.
Step 2: Calculate the inflation factor.
- Divide the CPI for 1995 by the assumed CPI for 1982: 152.4 / 100 = 1.524.
Step 3: Adjust the average price of $5 for inflation.
- Multiply the average price of $5 by the inflation factor: $5 * 1.524 = $7.62.
So, the price in 1995 of a typical item that had an average price of $5 during the years 1982 to 1984 would be approximately $7.62.