Question

The price of a first-class stamp in the United States in 1969 was 6 cents, whereas in 2010, it was 44 cents. The Consumer Price Index for 1969 was 36.7, whereas for 2010, it was 218.1. If the true cost of a first-class stamp did not increase between 1969 and 2010, what should it have cost in 2010? In other words, what would an 6-cent stamp in 1969 cost in 2010, when adjusted for inflation (in cents)? (Round your answer to the nearest cent.)

Answer 1

The price of a first class stamp in the United states, in 1969 was 6 cents.

The consumer price index for 1969 was 36.7, and for 2010, it was 218.1.

Now, we know that consumer price index is defined as

Let, the base period price of the stamp is x cents.

Now, for 1969,

Now, for 2010, if the true price of the stamp is y cents,

So, if the true cost of the stamp did not increase in the period, the cost of the stamp in 2010, should have been 35.66 cents.