A 10-minute telephone call to London through AT&T; cost $12 in 1976 and $14.10 i

Question

A 10-minute telephone call to London through AT&T; cost $12 in 1976 and $14.10 in December 2011 using an occasional calling plan. In 1976, the CPI was 56.9, and in December 2011, it was 225.7. Fill in the blank: In terms of December 2011 dollars, a call in 1976 costs $ _____. (Give your answer to 2 decimal places.) Every 1976 dollar was worth (225.7/56.9) dollars in December 2011. Fill in the blank. The real cost decreased between 1976 and December 2011 by _____ percent. (Give your answer correct to one decimal place.)

Explanation / Answer

1) a call in 1976 costs at =(56.9/225.7)*14.1=$3.55

2)from above change in real cost b/w 1976 and December 2011 =(12-3.55)*100/12=70.4%

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