Scenario 16-1
The price tag on a tennis ball in 1975 read $0.10,and the price tag on a tennis ball in 2005 read $1.00.The CPI in 1975 was 52.3,and the CPI in 2005 was 191.3.
-Refer to Scenario 16-1.In 1975 dollars,a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Question

Quizplus · Accepted Answer

To calculate the price of a 2005 tennis ball in 1975 dollars, we need to adjust for inflation using the CPI. We can use the formula: (Price in year 2/Price in year 1) x 100/CPI in year 2.

Using this formula:

(1.00/0.10) x 100/191.3 = 52.3/191.3 = 0.2735

So a 2005 tennis ball cost $0.27 in 1975 dollars. Therefore, tennis balls were cheaper in 1975.

Scenario 16-1 The Price Tag on a Tennis Ball in 1975 Read