Question

The price of a kilowatt-hour of electricity in the U.S. in 2010 was $0.128 and in...

The price of a kilowatt-hour of electricity in the U.S. in 2010 was $0.128 and in 2019 was $0.137. The consumer price index for the U.S. in 2010 was 218.1 and in 2019 was 255.6. The real price of a kilowatt-hour of electricity in 2010, using 2019 dollars was,

a.

$0.109
b.

$0.116
c.

$0.117
d.

$0.150
e.

$0.161
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Answer #1

Give information:

  • Price of electricity in 2010: $0.128
  • Price of electricity in 2019: $0.137
  • CPI in 2010: 218.1
  • CPI in 2019: 255.6

Tofind the relative real pricein 2010, we need to find the actral real price in both the years.

Therefore, real price in 2010 would be:

Hence, real price in 2010, using 2019 dollars would be:

Hence, the correct option is a. $0.109.

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