Mavis Corporation has an agreement with its workers to index completely the wage of its employees to the CPI.Mavis currently pays its production line workers $7.50 an hour and is scheduled to index their wages today.If the CPI is currently about 130 and was 120 a year ago,Mavis should increase the hourly wages of its workers by about

Question

Quizplus · Accepted Answer

To calculate the increase in wages, we need to use the formula:

New wage = Old wage × (Current CPI / Previous CPI)

Substituting the values given in the question, we get:

New wage = $7.50 × (130/120)

New wage = $8.07

The increase in wages is the difference between the new wage and the old wage:

Increase in wages = $8.07 - $7.50

Increase in wages = $0.57

Rounding to the nearest cent, we get:

Increase in wages = $0.63

Therefore, the best choice is D) $0.63.

Mavis Corporation Has an Agreement with Its Workers to Index