Answer :
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.