Scenario 11-4
Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90.
-Refer to Scenario 11-4. If Quinn only cares about maximizing her purchasing power, then she should

Question

Quizplus · Accepted Answer

Although the Charlieville job pays a lower salary, the cost of living (as measured by the CPI) is also lower in Charlieville, meaning Quinn's purchasing power will be higher. To determine this, we can calculate the real wage for each job:
For Wrexington: Real wage = (Nominal wage/CPI) x 100 = (50,000/150) x 100 = $33,333.33
For Charlieville: Real wage = (Nominal wage/CPI) x 100 = (40,000/90) x 100 = $44,444.44
Therefore, Quinn's purchasing power will be higher in Charlieville with a real wage of $44,444.44 compared to $33,333.33 in Wrexington.

Scenario 11-4 Quinn Has Job Offers in Wrexington and Across the Country