A 10-minute telephone call to London through AT&T cost $12 in 1976 and $14.10 in July 2015 using an occasional calling plan. In 1976, the CPI was 56.9, and in July 2015, it was 238.7.

1. In terms of July 2015 dollars, a call in 1976 costs $____. (Give your answer to 2 decimal places.)
2. The real cost decreased between 1976 and July 2015 by ___ percent.
(Give your answer correct to one decimal place.)

To find the cost of a call in 1976 in terms of July 2015 dollars, we need to adjust the 1976 cost for inflation using the Consumer Price Index (CPI).

1. Calculate the inflation factor:
To do this, we divide the CPI in July 2015 by the CPI in 1976.
Inflation factor = CPI in July 2015 / CPI in 1976 = 238.7 / 56.9 = 4.1929

2. Calculate the adjusted cost in July 2015 dollars:
To do this, we multiply the 1976 cost by the inflation factor.
Adjusted cost in July 2015 dollars = 1976 cost * inflation factor = $12 * 4.1929 = $50.31

Therefore, a call that cost $12 in 1976 would be equivalent to $50.31 in July 2015 dollars.

To find the percentage decrease in the real cost between 1976 and July 2015, we compare the adjusted cost to the 2015 cost.

3. Calculate the percentage decrease in the real cost:
To do this, we use the formula:
Percentage decrease = (2015 cost - adjusted cost) / (2015 cost) * 100

Percentage decrease = ($14.10 - $50.31) / $14.10 * 100 ≈ -257.30

The negative sign shows that there was a decrease in the real cost.
Therefore, the real cost decreased by approximately 257.3% between 1976 and July 2015.