In 1972,one could buy model rocket engines for $1.50 each.If those same engines cost $2.50 each today,then which pair of CPIs would make the engine prices in today's dollars the same for both years?
A)60 in 1972 and 95 today
B)60 in 1972 and 120 today
C)90 in 1972 and 150 today
D)96 in 1972 and 154 today

Question

Quizplus · Accepted Answer

We want to find the CPI for both years that will make the prices equivalent. We can set up a proportion:
CPI in 1972 / CPI today = Price in 1972 / Price today
Let x be the CPI in 1972:
x / 150 = 150 / 250
Solving for x, we get x = 90.
So, in 1972, the CPI was 90, and in order for the model rocket engine prices to be equivalent to $2.50 today, the CPI today needs to be 150. The only pair of CPIs that match this are choice C: 90 in 1972 and 150 today.

In 1972,one Could Buy Model Rocket Engines for $1