Ethel purchased a bag of groceries in 1970 for $8. She purchased the same bag of groceries in 2006 for $25. If the price index was 38.8 in 1970 and 180 in 2006, what's the price of a 1970 bag of groceries in 2006 prices?

Question

Quizplus · Accepted Answer

To find the price of a 1970 bag of groceries in 2006 prices, we need to use the inflation rates to adjust for the changes in value. We can use the formula:
(price in year B) = (price in year A) x (index in year B) / (index in year A)

Using the formula, we get:
(price in 2006) = $8 x (180) / (38.8) = $37.11

Therefore, the price of a 1970 bag of groceries in 2006 prices is $37.11, which is option C.

Ethel Purchased a Bag of Groceries in 1970 for $8