Question

Consternation Corporation has an agreement with its workers to index completely the wage of its employees using the CPI. Consternation Corporation currently pays its production line workers $7.50 an hour and is scheduled to index their wages today. If the CPI is currently 130 and was 125 a year ago, the firm should increase the hourly wages of its workers by

Answer 1

Answer:

increase in wage is $0.30

Explanation:

Given data:

worker pay $7.50/hr

consumer price index CPI - 130

increase in wages can be obtained by following relation

increase in wage $= \frac{CPI\times hourly\ wages}{CPI duration} - previous\ hourly\ wages$

Putting all value to get desired value

increase in wage $= \frac{130\times 7.50}{125} - 7.50$

increase in wage is $0.30