The table shown displays the price-level adjustments for Australia, China, and Mexico as compared to the United States. Someone who makes $40,000 in the United States would need to earn _______ in Mexico to maintain the same standard of living.

Question

The table shown displays the price-level adjustments for Australia, China, and Mexico as compared to the United States.  Someone who makes $40,000 in the United States would need to earn _______ in Mexico to maintain the same standard of living.

Quizplus · Accepted Answer

According to the table, the price-level adjustment for Mexico is 0.34, which means the cost of living in Mexico is 34% lower than the United States. To maintain the same standard of living as $40,000 in the US, one would need to earn $26,400 in Mexico ($40,000*(1-0.34) = $26,400). Therefore, the correct answer is B.

The Table Shown Displays the Price-Level Adjustments for Australia, China