Concept explainers
Problems 69-72 require the following discussion. The consumer price index (CPI) indicates the relative change in price over time for a fixed basket of goods and services. It is a cost of living index that helps measure the effect of inflation on the cost of goods and services. The CPI uses the base period 1982-1984 for comparison (the CPI for this period is 100). The CPI for March 2015 was . This means that in the period 1982-1984 had the same purchasing power as in March 2015. In general, if the rate of inflation averages percent per annum over years, then the CPI index after years is where is the CPI index at the beginning of the period. Source: U.S. Bureau of Labor Statistics
Consumer Price Index
(a) The CPI was for 2009 and for 2014. Assuming that annual inflation remained constant for this time period, determine the average annual inflation rate.
(b) Using the inflation rate from part (a), in what year will the CPI reach 300?
Want to see the full answer?
Check out a sample textbook solutionChapter 5 Solutions
Precalculus Enhanced with Graphing Utilities, Books a la Carte Edition Plus NEW MyLab Math -- Access Card Package (7th Edition)
Additional Math Textbook Solutions
Thomas' Calculus: Early Transcendentals (14th Edition)
Calculus and Its Applications (11th Edition)
Calculus: Early Transcendentals (3rd Edition)
University Calculus: Early Transcendentals (4th Edition)
Precalculus: Concepts Through Functions, A Unit Circle Approach to Trigonometry (4th Edition)
Calculus & Its Applications (14th Edition)
- The Oxford Dictionary defines the word nominal asa value that is “stated or expressed but notnecessarily corresponding exactly to the real value.[18]Develop a reasonable argument for why the termnominal rate is used to describe the annual percentagerate of an investment account that compoundsinterest.arrow_forwardThe average annual cost (tuition, fees, and room and board) at four-year private universities rose from $6,566 in 1980 to $29,188 in 2004. Calculate the percentage rise in cost from 1980 to 2004, and compare it to the overall rate of inflation as measured by the Consumer Price Index. The Consumer Price Index for 1980 is 85.4 and the Consumer Price index for 2004 is 188.6. The percentage rise in cost from 1980 to 2004 is %. (Round to the nearest tenth as needed.) Carrow_forwardSuppose that a company has determined that a 70% experience curve accurately describes the evolution of its production costs for a new line. If the first unit costs $100 to produce, what should the 1,000th unit cost based on the experience curve?arrow_forward
- question 3arrow_forwardIf the price of gold decreases at a monthly rate of 2.2%, by what percentage does it decrease in a year?arrow_forwardMeat and gasoline are two important components of the household budget in typical American homes, especially in lower income households. The figure below shows the evolution of average prices for Ground beef (per pound) and Gasoline (per gallon) for the 2001-2021 period in the United States. Average price data (in U.S. dollars), selected items Bananas, per lb. Bread, white, pan, per lb.. Chicken, fresh, whole, per lb. Eggs, grade A, large, per doz. Ground chuck, 100% beef, per lb. - Milk, fresh, whole, fortified, per gal. $6.00 $4.00 Lampions $2.00 $0.00 Aug 2001 Aug 2003 ...... A Aug 2005 Oranges, Navel, per lb. Tomatoes, field grown, per lb. Electricity per KWH Gasoline, unleaded regular, per gallon Utility (piped) gas per therm Aug 2007 Mummy Aug 2009 Aug 2011 Aug 2013 Aug 2015 Aug 2017 Aug 2019 Aug 2021 Hover over chart to view data. Note Shaded area represents recession, as determined by the National Bureau of Economic Research.. Source US. Bureau of Labor Statistics. Figure 1.…arrow_forward
- 2. Which of the following statements is false? Explain your answer. A. A price index can be used to compare changes in prices over time. B. A graph of the average monthly price of gas is an example of an index. C. Price index values are often calculated relative to a base value at a certain point in time or in a certain place. D. Index values can be greater than 100.arrow_forwardPlease help me and show me all steps .arrow_forwardTotal spending on health care in a certain region rose from $253 billion in 1982 to $2.7 trillion in 2020. Compare this rise in health care spending to the overall rate of inflation as measured by the Consumer Price Index.arrow_forward
- Explain in your own words the relationship between price elasticity of demand and total revenue. Give an example.arrow_forwardExample 20.25 You are given the following price index numbers with base year 1995. Calculate the new price index numbers with base year 2000. Year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Price Index Number 100 105 110 118 120 125 135 148 152 160arrow_forward2. Discuss the Price Index most commonly used in your country. How is it calculated?arrow_forward
- Trigonometry (MindTap Course List)TrigonometryISBN:9781337278461Author:Ron LarsonPublisher:Cengage Learning