Question

Which scenario reflects an annual inflation rate of 3%? A. In year 1, the price of a computer is $325.00. In year 2, the same computer costs $328.00. B. In year 1, the price of a soda is $0.75. In year 2, the same soda costs $0.78. C. In year 1, the price of a board game is $10.00. In year 2, the same board game costs $10.03. D. In year 1, the price of a sofa is $500.00. In year 2, the same sofa costs $515.00.

Answer 1

Answer: D is the correct option

Step-by-step explanation:

We want to determine which of the given scenarios reflects an annual inflation rate of 3%.

To get the new or inflated price, we will find 3% of the former price and add it to the former price. Looking at the scenarios,

A) In year 1, the price of a computer is $325.00. Applying 3% increase, it becomes

(3/100 × 325) + 325 = 9.75 + 325

= $334.75. This is higher than the cost in year 2

B) In year 1, the price of a soda is $0.75. Applying 3% increase, it becomes

(3/100 × 0.75) + 0.75 = 0.0225 + 0.75= $0.7725. This is lower than the cost in year 2

C) In year 1, the price of a board game is $10.00. Applying 3% increase, it becomes

(3/100 × 10) + 0.75 = 0.3 + 10= $10.3. This is higher than the cost in year 2

D) In year 1, the price of a sofa is $500.00. Applying 3% increase, it becomes

(3/100 × 500) + 500 = 15 + 500= $515

It corresponds to the price of year 2

So the correct option is D