In 1990, when the consumer price index (CPI) was 130.7, Deena purchased a house for $98,700. Assuming that the price of houses increased at the same rate as the CPI from 1980 to 1990, approximately how much would the house have cost in 1980, when the CPI was 82.4?

Question

ranga · Answer

This is a proportions problem.  Let x be the cost of the house in 1980.

Year                   1980           1990
Cost of House            x       $98,700
CPI                       82.4          130.7

x / 82.4 = 98700 / 130.7

x = ?