Question

From 1970 to 1990, the consumer price index (CPI) increased from 38.8 to 130.7. If a tube of toothpaste cost $0.77 in 1970 and the price of toothpaste increased at the same rate as the CPI from 1970 to 1990, by approximately how much did the price of a tube of toothpaste increase from 1970 to 1990?

Answer 1

The answer (according to apex) is 1.82

Answer 2

Answer:

Increase in the price of toothpaste is $1.82

Step-by-step explanation:

As we know the formula of consumer price index

$C.P.I.=\frac{P_{1} }{P}.100$

Here P1 = Current price of the the product

P = Price of the product in the base year

Now we will plug in the values for year 1970

$38.8=\frac{0.77}{P}.100$---------(1)

Similarly for year 1990

$130.7=\frac{P_{1} }{P}.100$------------(2)

Now we will divide equation 2 from 1.

$\frac{130.7}{38.8}=\frac{P_{1} }{0.77}$

$P_{1}=\frac{(130.7)(0.77)}{38.8}=2.59$

Therefore price of toothpaste in year 1990 will be = $2.59

Since in 1970 price of toothpaste was = $0.77

So change in price from 1970 to 1990 = 2.59 - 0.77 = 1.82

Increase in the price of a tube of toothpaste will be $1.82