Answered

1995 152.400
2000 172.200
2005 195.300
2010 218.056
2015 237.017
In 1995, the average airfare from Indy to Las Vegas was $292. By 2005, the airfare was $307. In 2015, it was $377. Round all dollar amounts correctly to the nearest cent.

Using the starting year of 1995, calculate the expected price of a flight for 2015 based on inflation



Answer :

sqdancefan

Answer:

  $454.13

Step-by-step explanation:

You want the expected price of an airfare in 2015 based on its price of $292 in 1995 and the price index values of 152.400 in 1995 and 237.017 in 2015.

Proportion

The price index is taken to be proportional to the airfare price, so we have ...

  [tex]\dfrac{\text{2015 price}}{\text{1995 price}}=\dfrac{\text{2015 index}}{\text{1995 index}}\\\\\\\dfrac{\text{2015 airfare}}{292.00}=\dfrac{237.017}{152.400}\\\\\\\text{2015 airfare}=292.00\times\dfrac{237.017}{152.400}=454.13[/tex]

The expected price of a flight for 2015 based on inflation is $454.13.

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Additional comment

The attached calculator display shows the expected prices in the other years for which index values are given. We note that actual airfares are substantially less than predicted by the general level of inflation.

View image sqdancefan

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