Scenario 6-2
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 6-2. The price of a 1975 golf ball in 2005 dollars is

Question

Quizplus · Accepted Answer

To convert the 1975 price of $0.20 into 2005 dollars, we need to adjust for inflation using the CPI. The formula for adjusting for inflation is: (new CPI/old CPI) x old price. So, we have: (191.3/52.3) x $0.20 = $0.73. Therefore, the 1975 golf ball would cost $0.73 in 2005 dollars.

Scenario 6-2 The Price Tag on a Golf Ball in 1975 Read