In 1964 in Riverside,California,one could buy a chili-dog and a root beer for $1.25.Today the same chili dog and root beer cost $2.95.Which pair of CPIs would imply that the cost in today's dollars was the same for both meals?

Question

Quizplus · Accepted Answer

To find the equivalent cost in today's dollars, we use the formula: Today's Price = Old Price * (Today's CPI / Old CPI). For the cost to be the same, $2.95 = $1.25 * (Today's CPI / Old CPI). Solving for the CPI ratio gives us 2.36. The pair of CPIs that gives this ratio is 141.6 / 60 = 2.36.

In 1964 in Riverside,California,one Could Buy a Chili-Dog and a Root