Asked Feb 27, 2019

You were reminiscing about the good old days in 1990 when you could buy an ice cream cone at Amy's in Austin, TX for $2.00 which today costs $4.00. The CPI in 1990 was 130.7 and in 2015 it was 237. Has Amy raised the price of her ice cream faster than inflation? Explain.


Expert Answer

Step 1

Consumer price index (CPI): The CPI estimates the variations in the cost of a specific collection of products and services purchased by buyers with an end goal to evaluate inflation. The figuring associated with the approximation of CPI is very hard.

Step 2

Calculation of percentage increase in inflation:

Step 3

Calculation of present value of ice cream in 2015:

We convert the ...


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