In 1970 a movie ticket cost US$2.00. Today, a movie tickets costs NZ$15.00 You also have the following data SUS/$NZ CPI 1970 2022 1.10 65 0.60 1122 How much is a 1970 movie ticket in 2022 prices (in $NZ)? (Enter your answer using 2 decimal places as dollar values normally would be. Enter the numerical value only – do not include the “$” symbol).
The correct answer and explanation is:
To adjust the 1970 movie ticket price to 2022 prices in NZD, we follow these steps:
Given Data:
- 1970 Movie Ticket Price: $2.00 USD
- Exchange Rate (USD/NZD) in 1970: 1.10
- Exchange Rate (USD/NZD) in 2022: 0.60
- CPI in 1970: 65
- CPI in 2022: 1122
Step 1: Convert the 1970 price to NZD
Movie Ticket Price in NZD (1970)=2.00×1.10=2.20 NZD\text{Movie Ticket Price in NZD (1970)} = 2.00 \times 1.10 = 2.20 \text{ NZD}
Step 2: Adjust for Inflation Using the CPI Formula
The formula for inflation adjustment is: Price in 2022=Price in 1970×CPI in 2022CPI in 1970\text{Price in 2022} = \text{Price in 1970} \times \frac{\text{CPI in 2022}}{\text{CPI in 1970}} Price in 2022=2.20×112265\text{Price in 2022} = 2.20 \times \frac{1122}{65} Price in 2022=2.20×17.26\text{Price in 2022} = 2.20 \times 17.26 Price in 2022=37.97 NZD\text{Price in 2022} = 37.97 \text{ NZD}
Answer:
37.97
Explanation:
Inflation significantly impacts purchasing power over time. In 1970, a movie ticket cost $2.00 USD, but due to rising prices over the decades, the equivalent cost today is much higher. To make this comparison in New Zealand Dollars (NZD), we first convert the price using the historical exchange rate.
The Consumer Price Index (CPI) measures inflation by tracking changes in the cost of goods and services over time. By applying the CPI ratio from 1970 to 2022, we adjust the value of NZ$2.20 in 1970 to its equivalent in today’s currency.
This shows that a $2.00 USD movie ticket in 1970 would be equivalent to $37.97 NZD in 2022, much higher than the actual $15.00 NZD price, indicating that movie ticket prices have not kept pace with general inflation.
Here is the generated image comparing movie ticket prices between 1970 and 2022 in New Zealand dollars. Let me know if you need any modifications!
