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zalisa [80]
3 years ago
7

Taylor's nominal income is $50,000 per year in Acity where the cost-of-living index is 200. Taylor is considering accepting a si

milar job and relocating to Becity where the cost-of- living index is 210. For Taylor's income to have the same purchasing power in Becity as $50,000 has in Acity, then Taylor's nominal income per year in Becity must equal:
Business
1 answer:
VARVARA [1.3K]3 years ago
5 0

Answer: $52,500

Explanation:

Taylor's real income in Acity is:

= Nominal income / Cost of living index

= 50,000 / 200

= $250

Taylor needs to be paid a nominal amount that when divided by the cost of living index in Bcity, Taylor's real income would be $250.

Real income = Nominal income / Cost of living index

250 = Income / 210

Income = 210 * 250

= $52,500

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