The typical family on the Planet Econ consumes 10 pizzas, 7 pairs of jeans, and 20 gallons of milk. In 2004, pizzas cost $10 each, jeans cost $40 per pair, and milk cost $3 per gallon. In 2005, the price of pizzas increased to $14 each, while the price of jeans and milk remained the same. Between 2004 and 2005, a typical family's cost of living:
A) increased by 9 percent.
B) decreased by 9 percent.
C) remained the same.
D) increased by 40 percent.

Question

Quizplus · Accepted Answer

The cost of living increased because the price of pizzas increased. In 2004, the total cost was $10*10 + $40*7 + $3*20 = $100 + $280 + $60 = $440. In 2005, the cost was $14*10 + $40*7 + $3*20 = $140 + $280 + $60 = $480. The increase is ($480 - $440) / $440 = 9.09%, approximately 9%.

The Typical Family on the Planet Econ Consumes 10 Pizzas