High School

In 1980, when the Consumer Price Index (CPI) was 82.4, Ivan purchased a house for $71,900. Assuming that the prices of houses increased at the same rate as the CPI from 1970 to 1980, approximately how much would the house have cost in 1970 when the CPI was 38.8?

Answer :

x/71900
x = (71900)(38.8/82.4) =33855.8252427184466 =$33,900

Answer:

cost of house in 1970= $33855.82

Step-by-step explanation:


in this question we have given,

in 1980 consumer price index,[tex]I_{1}[/tex] = 82.4[/tex]

cost of house in 1980,[tex]=71,900

CPI in 1970,[tex]I_{2}[/tex]= 38.8

we have to determine cost of house in 1970,[tex]C_{2}[/tex]=?

Formula used

[tex]\frac{C_{2}}{C_{1}} =\frac{I_{2}}{I_{1}}[/tex] ............(1)

put values in equation (1)

[tex]\frac{C_{2}}{71900} =\frac{38.8}{82.4} \\C_{2}=33855.82[/tex]

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