Question

The median price, P, of a home rose from $50 thousand in 1980 to $150 thousand in 2000. Let t be the number of years since 1980. If instead the housing prices increased exponentially, find an equation of the form P = Poa t to represent housing prices. Again, P is measured in thousands. (Round your answer for a to 6 decimal places.)

Answer 1

Answer: $P=50,000(1.056467)^t$

Step-by-step explanation:

Here the function that shows the price of home after t years,

$P=P_0(a)^t$

Where,

$P_0$ is the initial price of home,

a is the growth factor,

t is the time.

Here, The Initial price of home,

$P_0 = 50,000$

P = $ 150,000

Time since 1980, t = 20 years.

Thus, $150,000=50,000(a)^{20}$

$3=(a)^{20}$

$a=(3)^{1/20} =1.05646730855\approx 1.056467$

Thus, the complete function that shows the price of home after t years,

$P=50,000(1.056467)^t$

Answer 2

150,000 = 50000a^20
a^20 = 150000/50000 = 3
a = 20th root of 3 = 1.056467

Required equation is P = 50000(1.056467)^t