Please help

coolguy · Jun 1, 2006, 02:55 PM

In 1950, the price of soft drinks was $0.10. In 199, the price of soft drinks was $0.60. If the CPI in 1950 was 30 and the CPI in 1990 was 90, what was the change in the price of soft drinks from 1950 to 1990, measured in 1950 dollars?

Ok now I think the consumer price index is measured as

Inflation rate in year 2 = CPI in year 2 - CPI in year 1/ CPY in year 1 X 100

Can anyone help!!

CaptainForest · Jun 1, 2006, 08:33 PM

The CPI for 1950 = 30
The CPI for 2006 = 90

Use the following formula to compute the calculation:
1950 Price = 1990 Price x (1950 CPI / 1990 CPI)
1950 Price = $0.60 x (30 / 90)
1950 Price = $0.20

Source: http://minneapolisfed.org/Research/d...calc/index.cfm

How the CPI is used to make these calculations.
What would an item or service purchased in 2006 be worth in 19? Dollars?

Example:

The CPI is used to calculate how prices have changed over the years. Let's say you have $7 in your pocket to purchase some goods and services today. How much money would you have needed in 1950 to buy the same amount of goods and services?

The CPI for 1950 = 24.1
The CPI for 2006 = 202.5
Use the following formula to compute the calculation:
1950 Price = 2006 Price x (1950 CPI / 2006 CPI)
$0.83 = $7.00 x (24.1 / 202.5)

Add your answer here.