Question

You are offered two jobs, one in Chicago paying $67,000 and one in Dallas paying $58,000. The price index in Chicago is 110.8, and in Dallas it is 91.5. If real wages are the only consideration, then you would _________.

Answer 1

Answer:

you definitely take the job in Dallas because the real wage is higher there.

Explanation:

given data

Chicago paying = $67,000

Dallas paying = $58,000

price index in Chicago = 110.8

price index in Dallas = 91.5

solution

we get here Real wage in Chicago that is

Real wage in Chicago = 67000 × $\frac{100}{110.8}$  

Real wage in Chicago = $60469

and

Real wage in Dallas is  

Real wage in Dallas = 58000 × $\frac{100}{91.5}$  

Real wage in Dallas = $63388

so you definitely take the job in Dallas because the real wage is higher there.