Question

In 1983, a winter hat cost $12.95. Today, a winter hat costs $24.50. If the CPI is 219, what is the percent relation of the actual price of a winter hat to the expected price?
a.
The actual price is 39.3% higher than the expected price.
b.
The actual price is 15.8% higher than the expected price.
c.
The actual price is 13.6% lower than the expected price.
d.
The actual price is 29.8% lower than the expected price.

Answer 1

Expected price = 12.95*(219/100) = 12.95*2.19 = \$28.36 (approx).
Actual 24.50 is (24.50−28.36)/28.36 = −0.136 ≈ −13.6%, i.e. 13.6% lower.

Answer: c.