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
A
The actual price is $14.79 higher than the expected price.
B
The actual price is $3.89 higher than the expected price.
C
The actual price is $9.20 lower than the expected price.
D
The actual price is $11.86 lower than the expected price.
Explanation
Use the CPI to estimate the price after inflation: $12.75 × 1.93 = $24.61, rounded to the nearest cent. The actual price is $28.50, so it is $28.50 − $24.61 = $3.89 higher than the expected price. The correct choice is “The actual price is $3.89 higher than the expected price.”
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