Question

a pair of linen slacks cost $28.50 in 1972 when the CPI was 130 how much will the slacks cost in 2001 when the CPI was 530?

Answer 1

A pair of linen slacks cost $28.5 in 1972; CPI was 130

Cost in 2001=?; CPI was 530

CPI is represented by the following expression:

$\begin{gathered} \text{Price in dollars of the original year}\cdot(Price\text{ level in 2001/price level in 1972)} \\ 28.5\cdot(\frac{530}{130})=28.5\cdot\frac{53}{13}=116.19\text{ usd} \end{gathered}$

So, $28.5 in 1972 is the same amount as $116.19 in 2001