Question

The prices of consumer goods do not always exactly follow the CPI. The following chart shows several consumer items, along with their respective prices in 1983 and today.

Item
Price in 1983 ($)
Current Price ($)
Pair of boots
67.45
126.85
Hair dryer
15.25
29.95
Box of tissues
1.15
2.25
Toaster
22.85
44.25

Using the prices shown on this chart, which of the following is a reasonable estimate of the current CPI?
a.
208
b.
195
c.
180
d.
173


Please select the best answer from the choices provided

A
B
C
D

Answer 1

Compute each price ratio (current ÷ 1983) and average them, then multiply by 100 (1983 CPI = 100):

- Boots: 126.85 / 67.45 ≈ 1.881
- Hair dryer: 29.95 / 15.25 ≈ 1.964
- Tissues: 2.25 / 1.15 ≈ 1.957
- Toaster: 44.25 / 22.85 ≈ 1.937

Average factor ≈ (1.881 + 1.964 + 1.957 + 1.937) / 4 ≈ 1.935 → CPI ≈ 1.935 × 100 ≈ 193.5.

Closest choice: 195 (B).