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30 August, 19:36

In 1969, Malcolm bought a Pontiac Firebird for $2,500. If the price index was 36.7 in 1969 and the price index was 235 in 2013, then what is the price of the Firebird in 2013 dollars?

a. $4,609.57

b. $4,957.5

c. $13,508.17

d. $16,008.17

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Answers (1)
  1. 30 August, 21:18
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    Option (d) $16,008.17

    Explanation:

    Data provided in the question:

    The price of the Firebird in 1969 = $2,500

    Price index in 1969 = 36.7

    Price index in 2013 = 235

    Now,

    The price of the Firebird in 2013 dollars will be

    = [ Price index in 2013 : Price index in 1969 ] * The price of the Firebird in 1969

    = [ 235 : 36.7 ] * $2,500

    = 6.40327 * $2,500

    = $16,008.17

    Hence,

    Option (d) $16,008.17
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