Iggie took a university teaching job as an assistant professor in 1974 at a salary of $10,000. By 2003, she had been promoted to full professor, with a salary of $50,000. If the price index was 50 in 1974 and 180 in 2003, then what is Iggie's 2003 salary in 1974 dollars?

Question

Quizplus · Accepted Answer

To convert Iggie's 2003 salary to 1974 dollars, we need to adjust for inflation using the price index. The inflation factor is the ratio of the price index in 2003 to the price index in 1974:

inflation factor = 180/50 = 3.6

This means that prices in general were 3.6 times higher in 2003 than in 1974. To convert Iggie's 2003 salary of $50,000 to 1974 dollars, we divide by the inflation factor:

Iggie's 2003 salary in 1974 dollars = $50,000 / 3.6 = $13,888.89

Therefore, the best choice is (A).

Iggie Took a University Teaching Job as an Assistant Professor