In 1983,one could buy a model radio-controlled airplane for $11.50 each.Those same planes are available today and the price increased at exactly the rate of inflation.If the CPI today is 220.5 and in 1983 was 105,what is the price of the airplane today?
A)$24.15
B)$11.50
C)$5.48
D)$2.10

Question

Quizplus · Accepted Answer

We need to adjust the 1983 price for inflation using the CPI values.
Inflation rate = (CPI today - CPI in 1983) / CPI in 1983
= (220.5 - 105) / 105
= 1.1 or 110% (rounded off to one decimal place)

So, the price of the airplane today will be:
Price today = Price in 1983 * (1 + inflation rate)
= $11.50 * (1 + 1.1)
= $11.50 * 2.1
= $24.15

Therefore, the best choice is A) $24.15.

In 1983,one Could Buy a Model Radio-Controlled Airplane for $11