In 1990, when the consumer price index (CPI) was 130.7, Deena purchased a house for $98,700. Assuming that the price of houses increased at the same rate as the CPI from 1980 to 1990, approximately how much would the house have cost in 1980, when the CPI was 82.4?

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13 February, 02:50

In 1990, when the consumer price index (CPI) was 130.7, Deena purchased a house for $98,700. Assuming that the price of houses increased at the same rate as the CPI from 1980 to 1990, approximately how much would the house have cost in 1980, when the CPI was 82.4?

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Isaias Edwards · Answer 1

To answer the question above, it should be noted that the ratio of the consumer price indices (CPI) is equal to the ratio of the prices. For this given, let x be the price of the house in 1980,

130.7 / 82.4 = $98700 / x

The value of x is equal to $62,225.55