Reference no: EM132052143

Real Price Assignment

Do you remember what the price of a candy bar used to be? Or how about the price of comic books, newspapers, magazines, soda, movie tickets, blue jeans, juice...whatever!! Your assignment is to find out the price of something from at least 5 years ago and compare it to today's price. Then determine if the item is now cheaper, more expensive or about the same price (in real inflation-adjusted dollars).

The results may surprise you!! (Because gasoline is used as an example, no one else can use gasoline, oil etc. it!) If you ask your older friends or relatives, you'll have some very interesting comparisons.

It will be almost impossible to compare EXACTLY the same thing because there will be differences in weight, size, brand, additional government standards and regulations, etc. Make a note of as many of these differences as you can when you make your comparisons.

1. Use this formula to compute prices:

Price of an item in 2013 = (Price in earlier year)(CPI 2011)/CPI earlier year

2. Analysis

Adjusted for the inflated dollar, gasoline in 1981 was less than it is in 2013, (compared to almost $4.00 a gallon). But, when you use the adjusted price of $2.53 instead of the actual price paid in 1981 of $.99, the difference is not as much ($4.00 - $2.53 = $1.47). When you compare amounts that are adjusted for inflation, it's like comparing "apples to apples" or "oranges to oranges," so to speak. The basis of comparison is more alike. When you make the adjustment for inflation, you can look at factors that may have contributed to the difference in "real" price. Some factors to consider may be production costs, competitor pricing, market or government regulations, economic fluctuations, etc. Consider what causes the difference in your comparison. Be sure to explain these factors in your analysis.

Attachment:- Assignment.rar