Soda is How Cheap?!?!

I recently watched the documentary film Food Inc.

It was a good look at how badly mishapen our food productions systems have become. The central message of the film is how we have given over the control of our nourishment to the hands of a handful of huge coorporations whose sole goal is certainly not public health or sustainability,but only maximizing short term profits.

One of the central messages of the film was that the low price of unhealthy foods is largely caused by U.S. goverment subsidies given to corn growers, which in turn have made high fructose corn syrup (among countless other corn based items) artificially cheap.

About a week after watching the film I came across a great article in the New York Times about a proposal to tax soda as a means to raise revenue to fund public health efforts in combating childhood obesity.

The online version of the story leads with this graph:

Change in price of items since 1978, relative to overall inflation, as measured by the Consumer Price Index. The price of carbonated drinks, for example, has fallen 34 percent relative to all other prices.

The graph confirms my feelings that since I graduated from high school, fresh fruits and vegetables have become quite expensive, while soda has become nearly free.

It leads to some great questions:

1. This month, Walmart is selling a case of 24 cans of name brand soda for about $5. Find the average rate of inflation (CPI) since 1978 and determine what the price of soda would have been in 1978 had the cost of soda matched the overall rate of inflation.
   
   
2. Again, use the average rate of inflation (CPI) since 1978, but this time use the information from the graph to estimate the cost of a can of soda in 1978 based on todays cost. Do some research and find the actual cost of soda in 1978 and speculate about why your estimate might be off by a bit from the actual price you find.
   
   
3. Assume there exists some food item with a price that has changed linearly relative to inflation since 1978. What would its graph look like if it was just steep enough for the price of the item had actually have decreased throughout this time period. Again, use the actual average rate of inflation given by the CPI as you answer this question.