Question

Your friend currently works as an accountant at a public accounting firm in the small town of Beaver Falls, Pennsylvania. He is offered a job in New York City for $60,000. Your friend calls you and tells you that he is excited about the new job offer, which gives him a raise from his current salary of $50,000. Based on your knowledge of economics, you think that Choose one: O A. your friend most likely should not be quite so excited because the extremely high cost of living in New York City means his real salary increase will be less than he imagined. B. your friend has every reason to be excited because he will be getting paid C. your friend has reason to be excited because in a bigger city he will häve more D. your friend has no reason to be excited because higher pay implies more job 120% of what he used to be paid. things to do and his higher salary will allow him to spend on those activities. responsibilities and more working hours. < 11/15> SUBMIT O Type here to search Esc

Answer 1

Answer:

A. your friend most likely should not be quite so excited because the extremely high cost of living in New York City means his real salary increase will be less than he imagined.

Explanation:

Large cities are associated with a high cost of living. House rent, food, and transport will cost more in major cities compared to smaller towns. In considering the job offer, the accountant should analyze the cost implications of living in the New York City in comparison to his salary increment.

A salary raise in economic terms will refer to an increase in pay after adjusting to any increase increase in prices. If the prices and subsequently cost of living is rising at a higher rate compared to salary increment, then an individual is actually experiencing reduced income. The accountant should consider the offer if the salary increments would cover the expected rise in the cost of living and leave him with some surplus.