High School

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Ethel purchased a bag of groceries in 1970 for $8. She purchased the same bag of groceries in 2006 for $25. If the price index was 38.8 in 1970 and the price index was 180 in 2006, then what is the price of the 1970 bag of groceries in 2006 dollars?

Answer :

The price of the 1970 bag of groceries in 2006 dollars would be approximately $37.11, after adjusting for inflation using the given price indices.

To calculate the price of the 1970 bag of groceries in 2006 dollars, we need to adjust the price from 1970 by the amount of inflation that occurred between 1970 and 2006. This is done using the given price indices for those years.

First, we find the ratio of the two price indices to determine how much the price level has changed:

Price Index in 2006 / Price Index in 1970
180 / 38.8
= 4.6392

Next, we multiply the 1970 price by this ratio to get the price in 2006 dollars:

$8 * 4.6392
= $37.11

Therefore, the price of the 1970 bag of groceries in 2006 dollars would be approximately $37.11

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Rewritten by : Barada

Answer:

D. $37.11

Explanation:

Given that

Price of grocery bag in 1970 = 8

Price index in 1970 = 38.8

Price index in 2006 = 180

Thus,

Price if grocery bag in 2006

= price in 1970 × (Price index 2006 ÷ price index 1970)

= 8 × (180 ÷ 38.8)

= 8 × 4.639

= 37.112

= $37.11