Use the average annual consumer price index table to convert

Use the average annual consumer price index table to convert the 1979 minimum wage from actual dollars to 1996 dollars. Is the result consistent with the entry in the accompanying minimum wage table? E Click the icon to view the table of federal minimum wages. The 1979 minimum wage in 1996 dollars is $L. (Round to the nearest cent as needed.) This result consistent with the entry in the accompanying minimum wage table because the result value is close to the minimum wage table value of $L (Round to the nearest cent as needed.)

Solution

a) CPI 1996/CPI 1979 = 156.9/72.6 = 2.161

This means value in 1996 is 2.161 times of value in 1979

Value in 1979 is = $2.90 Given

So, value in 1996 = 2.90 * 2.161 = $6.2669

Rounding to nearest cent = $6.27

1979 wage is = $6.27 as given in the upper table.