Question

Over a long period of time, the price of a candy bar rose from $0.20 to $1.20. Over the same period, the CPI rose from 150 to 300. Adjusted for overall inflation, how much did the price of the candy bar change

Answer 1

Answer: 200%

Step-by-step explanation:

Given : Over a long period of time, the price of a candy bar rose from $0.20 to $1.20.

Over the same period, the CPI rose from 150 to 300.  , where CPI= Consumer price index.

CPI has doubled ⇒ Overall price level doubled.

The price of candy rose by $\dfrac{\ 1.20}{\ 0.20}=6$ times.

Adjusted for overall inflation , The actual price of the candy ( today )=  ($0.20 ) x ( 300) ÷ (150)

=$ 0.40

Now , The change in the price of candy bar = ( New price of candy- actual price of the candy) ÷ (actual price of the candy) x 100

= $\dfrac{\ 1.20-\ 0.40}{\ 0.40}\times100=200\%$

Hence, the change in the price of the candy = 200%