Question

From 1980 to 1990, the consumer price index (CPI) increased from 82.4 to 130.7. If a gallon of apple juice cost $0.95 in 1980 and the price of apple juice increased at the same rate as the CPI from 1980 to 1990, approximately how much did a gallon of apple juice cost in 1990?

A. $0.56
B. $0.82
C. $1.51
D. $1.31

Answer 1

Answer: C $1.51

To solve this, start with a proportion. Put the CPI numbers on the left and the apple juice prices on the right.

You will have:

82.4/130.7 = 0.95/x

Cross multiply to solve and you will get the price of the juice is $1.51.

Answer 2

The cost of the gallon of the apple juice is approximately $1.51 in 1990. (Option C)

Explanation:

As it can be assumed that the increase of the gallon of apple juice is proportional to the increase of the CPI, we can state that the rate of the price of 1990 to the price of 1980 is the same than the rate of the CPI in 1990 to the CPI in 1980:

$130.7 / $82.4 = Pg (1990)/ $0.95

Where Pg (1990) is the apple juice gallon cost for 1990. By solving the equation above:

$130.7 / $82.4 * $0.95 = Pg (1990)

Pg (1990) = $1.5068 ---> Pg (1990) = $1.51