Question

in 1983, a microwave oven cost \\$78.75. today, a microwave oven costs \\$92.66. if the cpi is 177, what is the relation of the actual price of a microwave oven to the expected price, to the nearest cent?
a. the actual price is \\$46.73 lower than the expected price.
b. the actual price is \\$5.59 lower than the expected price.
c. the actual price is \\$13.91 higher than the expected price.
d. the actual price is \\$71.35 higher than the expected price.

Explanation:

Calculate the expected price of the microwave oven

Using the Consumer Price Index and Inflation Adjustment knowledge points

$$ \text{Expected Price} = \text{Price in 1983} \times \frac{\text{CPI}}{100} $$

$$ \text{Expected Price} = 78.75 \times \frac{177}{100} = 78.75 \times 1.77 = 139.3875 \approx \$139.39 $$

Compare the actual price to the expected price

Using the Inflation Adjustment knowledge point

$$ \text{Difference} = \text{Expected Price} - \text{Actual Price} $$

$$ \text{Difference} = 139.39 - 92.66 = 46.73 $$

Since the actual price (\$92.66) is less than the expected price (\$139.39), the actual price is \$46.73 lower than the expected price.

Answer:

• a. The actual price is $46.73 lower than the expected price. (Correct answer)
• b. The actual price is $5.59 lower than the expected price.
• c. The actual price is $13.91 higher than the expected price.
• d. The actual price is $71.35 higher than the expected price.