If the price of a soda was 15 cents in 1970, when the cpi was 50, and 50 cents in 2007 when the cpi

If the price of a soda was 15 cents in 1970, when the cpi was 50, and 50 cents in 2007 when the cpi was 172, then the real price of the 1970 soda in terms of 2007 dollars is?

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  1. It then means that there was an increase in price of $0.35 and an increase in the Consumer Price Index of 122  of Soda after 37 years for inflationary reasons.

    Explanation:

    The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

    Solution

    CPI =  New Price/ Old Price

    Where:

    Old Price = $0.15

    New Price = $0.50

    ∴ = 0.50/0.15

    CPI = 3.33

    Then there was no significant rise on inflation since the CPI for 37 years was 3.33

  2. Increase in price $0.35 and consumer price also increase.

    Soda after 37 years, consumer 122.

    Explanation:

    As per the question,

    Soda was 15 cents in​ 1970, when the cpi was​ 50

    50 cents in​ 2007, when the cpi was​ 172, then

    cpi=  N.price/ Old.price

    = 0.50/0.15

    =3.33

    No major increment after 37 years.

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