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21 June, 16:57

In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about $1.7 million. A price index for nonresidential construction was 24 in 1949, 108 in 1987, and 126.5 in 2000. According to these numbers, the hospital cost about

a.$2.1 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars.

b.$2.1 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars.

c.$2.6 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars.

d.$2.6 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars.

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Answers (1)
  1. 21 June, 17:23
    0
    Option (d) is correct.

    Explanation:

    Given that,

    Price index in 1949 = 24

    Price index in 1987 = 108

    Price index in 2000 = 126.5

    Cost of building hospital in 1987 = $500,000

    According to these numbers, the hospital cost in 2000 is а bout:

    = Cost of building hospital in 1987 * (Price index in 2000 : Price index in 1949)

    = $500,000 * (126.5 : 24)

    = $500,000 * 5.27

    = $2,635,417 > $1.7 million

    Therefore, it is more than the cost of the courthouse restoration in 2000 dollars.
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