Question

In 1983, a year-long newspaper subscription cost $12.75. Today, a year-long newspaper subscription costs $28.50. If the CPI is 193, what is the relation of the actual price of a year-long newspaper subscription to the expected price, to the nearest cent?

Answer 1

The CPI or the Customer Price Index is calculated through the equation,
                             CPI = (price at a certain year/ price at the base year) x 100
If our base year is 1983, the price of a year-long newspaper subscription will cost,
                    193 = (price at a certain year / 12.75) x 100
                                price at a certain year = $24.6075
Thus, the current price which is $28.50 is slightly higher than the expected price based on the given CPI.