Question

In 1974, the price of a first class postage stamp was 10 cents, a loaf of bread averaged 28 cents, gasoline was 53 cents per gallon, and the average price of a new car was $3500. In 2014, the postage stamp was 49 cents, a loaf of bread was $2.46, gasoline averaged $3.36 per gallon, and the average new card cost $32,531. From this statement, it follows that consumers today are worse off than consumers in 1975. Is this true? explain your answer.

Answer 1

Answer:

It cannot be determined if they are worse off

Explanation:

In this question, we are asked to determine if consumers today are worse off then consumers in the year 1975.

From the data gathered in the question, it is not likely to know if consumers today are worse off or better than consumers in 1975.

This is because, with this data, only the inflation rate can be measured. Now what determines if the consumer now is better off or worse off?

If the consumer’s income increase at a rate greater than the pace at which inflation is increasing, then obviously he would be better off now than before.

If the pace of increase is the same, then he is neither better off nor worse off.

Lastly, if the income has increased at a rate which is lesser than the inflation pace, then we can say that the consumer today is worse off

Answer 2

Answer:

No consumers today are not worse off than consumers in 1974

Explanation:

In 1974,  first class postage stamp cost 10 cents, a loaf of bread costs 28 cents, gasoline was 53 cents per gallon, and the average price of a new car was $3500.

In 2014, the price of postage stamp was 49 cents,  price of a loaf of bread was $2.46, gasoline averaged $3.36 per gallon, and the average new card cost $32,531.

From the statement, consumers today are not worse than consumers of 1974 even the prices of  goods now are far more than that of 1974 and they have different purchasing power.