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Answer :
Answer:
$33,856
Step-by-step explanation:
We have been given that in 1980, when the consumer price index (CPI) was 82.4, Ivan purchased a house for $71,900. The CPI in 1970 was 38.8. We are asked to find the cost of house in 1970.
[tex]\text{Past dollars in terms of recent dollars}=\text{Dollar amount}\times \text{Ending-period CPI}\div\text{ Beginning-period CPI}[/tex]
Substitute the given values:
[tex]\text{Cost of house in 1970}=\$71,900\times 38.8\div 82.4[/tex]
[tex]\text{Cost of house in 1970}=\$71,900\times 0.470873786407767[/tex]
[tex]\text{Cost of house in 1970}=\$33,855.825242718[/tex]
[tex]\text{Cost of house in 1970}\approx \$33,856[/tex]
Therefore, the cost of house in 1970 was $33,856.
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