In 1972,one could buy a bag of chips,a pound of hamburger,a package of buns,and a small bag of charcoal for about $2.50.If the same goods today cost $6.00,then which pair of CPIs would make the cost in today's dollars the same for both years?
A)60 in 1972 and 150 today
B)65 in 1972 and 156 today
C)75 in 1972 and 160 today
D)90 in 1972 and 145.8 today

Question

Quizplus · Accepted Answer

We need to find the ratio of the cost in today's dollars to the cost in 1972 for each pair of CPIs and then multiply it by the cost in 1972 to see if we get $6.00. For choice A, the ratio is 150/60=2.5, so 2.5*2.50=6.25, which is more than $6.00. For choice C, the ratio is 160/75=2.13, so 2.13*2.50=5.32, which is less than $6.00. For choice D, the ratio is 145.8/90=1.62, so 1.62*2.50=4.05, which is much less than $6.00. Only for choice B, the ratio is 156/65=2.4, so 2.4*2.50=6.00, which is the cost in today's dollars. Therefore, B is the best choice.

In 1972,one Could Buy a Bag of Chips,a Pound of Hamburger,a