In 1964, Harvey bought a Ford Mustang for $2,368. In 2019, he bought another new Ford Mustang for $32,000. If the price index in 1964 was 35 and the price index in 2019 was 200, what is the price of the 1964 Ford Mustang in 2019 prices?

Question

Quizplus · Accepted Answer

To find the price of the 1964 Ford Mustang in 2019 prices, we need to adjust the 1964 price for inflation using the price indices from 1964 and 2019.

First, we need to calculate the inflation rate over the period of time between 1964 and 2019:

Inflation rate = (Price index in 2019 / Price index in 1964) = 200 / 35 = 5.71

This means that prices increased by a factor of 5.71 between 1964 and 2019.

To find out the 1964 price in 2019 dollars, we multiply the 1964 price by the inflation rate:

Price in 2019 dollars = 2,368 x 5.71 = $13,530.08

Therefore, the best choice is C.

In 1964, Harvey Bought a Ford Mustang for $2,368