The price of a gallon of gasoline was $2.01 in May 2004 compared to 39 cents in 1973. However, the Consumer Price Index was 44.4 in 1973 compared to 189.1 in May 2004 (1980 -1984 = 100). In terms of the purchasing power of the dollar in 2004, the 1973 price of gasoline was
A)$0.39.
B)$0.44.
C)$1.66.
D)$2.15.

Question

Quizplus · Accepted Answer

To find the equivalent price in 2004 dollars, adjust the 1973 price by the ratio of the Consumer Price Index (CPI) in 2004 to the CPI in 1973: (39 cents) * (189.1 / 44.4) = $1.66.

The Price of a Gallon of Gasoline Was $2