Inflation is an increase in the price of goods and services...

Inflation is an increase in the price of goods and services every year due to economic conditions. It is usually expressed as a percentage of the previous year's price (original). Example 20 If the inflation every year is 2%, what would be the price of a bottle of milk (a) this year when it was $1.20 last year? 0.020 0.024 1.20 x 2% = $1.224 1.20 + 0.024 = $1.224 (b) last year when it is $1.40 this year? 1.40 / 102/100 = 1 1.40 x 98/100 = $1.37

Transcript

00:01 Hi, we are to solve for the price of a bottle of milk if we're given an inflation rate of 2 % and then we're given the original price.

00:12 That's for question a.

00:13 And then for b, we're solving for the price of a bottle of milk in the previous year when we're given the original price or the price of the milk for this year.

00:23 So we'll start with a.

00:26 B, we're solving for the new price of milk.

00:35 And this would be equivalent to the original price last year, which is 1 .20.

00:42 And then we will add here the increase due to inflation.

00:45 Now the inflation rate is 2%.

00:47 And we have to convert this to decimals.

00:51 So we will divide this by 100%.

00:52 And then we'll multiply again the original price, which is 1 .20.

00:57 So solving for the increase due to inflation first, first, 2 % divided by 100 % multiplied by 1 .20 is $0 .024.

01:10 Now we'll add these two numbers, 1 .20 plus 0 .024.

01:15 This would give us 1 .224.

01:19 So this is the new price of a bottle of milk.

01:26 This is our answer for the first question.

01:28 The second question is we're solving for the opposite of the first question.

01:34 We're solving for the original price of milk last year.

01:37 If this year the price is 1 .40, so it will be easier to just denote the original price of milk.

01:52 Let's denote the original price as x...

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