Scenario 11-2
The price tag on a golf ball in 1975 read $0.20, and the price tag on a golf ball in 2005 read $2.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.
-Refer to Scenario 11-2. In 1975 dollars, a 1975 golf ball cost $0.20 and a 2005 golf ball cost

Question

Quizplus · Accepted Answer

To find the cost of a 1975 golf ball in 2005 dollars, we need to adjust for inflation using the CPI. We can use the formula:

Cost in year B = Cost in year A x (CPI in year B / CPI in year A)

Plugging in the values, we get:

Cost of 1975 golf ball in 2005 dollars = $0.20 x (191.3 / 52.3) = $0.73

Therefore, a 1975 golf ball in 2005 dollars would cost $0.73, which means that golf balls were cheaper in 1975 than 2005. However, the answer choices do not include $0.73. The closest option is A, which says the cost is $0.55, but this is incorrect. Therefore, the best choice is A, but with the explanation that the cost of a 1975 golf ball in 2005 dollars is actually $0.73, not $0.55.

Scenario 11-2 The Price Tag on a Golf Ball in 1975 Read