From 1980 to 2000, the consumer price index (CPI) increased from 82.4 to 172.2. If a pound of margarine cost $0.51 in 1980 and the price of margarine increased at the same rate as the CPI from 1980 to 2000, approximately how much did a pound of margarine cost in 2000?

Question

Michael Landry

Mathematics

23 June, 19:36

From 1980 to 2000, the consumer price index (CPI) increased from 82.4 to 172.2. If a pound of margarine cost $0.51 in 1980 and the price of margarine increased at the same rate as the CPI from 1980 to 2000, approximately how much did a pound of margarine cost in 2000?

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Dennis Fernandez · Answer 1

The price of the margarine in year 2000 is $161.55. This is computed using the CPI formula. CPi is equal to current price times base price times (current CPI over Base CPI). Putting it to numbers it would be, 172.2 = Current Price times $0.51 times (172.2 divided by 82.4).