The Consumer Price Index (CPI) is a measure of the average change in price over

Question

The Consumer Price Index (CPI) is a measure of the average change in price over time from a designated reference period, at which it equals 100. The index is based on prices of basic consumer goods and services. The table provided lists the CPI for several years from 1960 to 2012. If the price change in cars parallels the change in the CPI, what would a car sell for (to the nearest dollar) in 2012 if a comparable model sold for $14,000 in 1999?

Year CPI

1960 29.6

1973 44.4

1986 109.6

1999 156.9

2012 229.6

In 2012, a car would sell for approximately how many $?

Explanation / Answer

We've been given that change in CPI corresponds to the change in Price.

So, first of all, we find the change in CPI from 1999 to 2012.

Change in CPI = 229.6 - 156.9 = 72.7

Therefore, change is selling price would be $7270.

Therefore, the new selling price in year 2012 would be $14000+7270 = $21270

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