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The following table shows the average retail price of butter and the Consumer Price Index from 1980 to 2010, scaled so that the CPI = 100 in 1980.
1980
1990
2000
2010
CPI
100
158.56
208.98
218.06
Retail price of butter (salted, grade AA, per lb.)
$1.88
$1.99
$2.52
$2.88
a. Calculate the real price of butter in 1980 dollars. Has the real price increased/decreased/stayed the same from 1980 to 2000? From 1980 to 2010?
b. What is the percentage change in the real price (1980 dollars) from 1980 to 2000? From 1980 to 2010?
c. Convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars.
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