When comparing the buying power of a salary offer of $50,000 in Boston with a $53,000 offer in Los Angeles,the Los Angeles salary offer could buy ____ of goods and services in Boston assuming the index was 128.6 for Boston and 113.7 for Los Angeles.

Question

Quizplus · Accepted Answer

To determine the buying power of $53,000 in Boston, we need to first adjust the salary for the cost of living in both cities. We do this by dividing $53,000 by the cost of living index for Los Angeles (113.7), and then multiplying the result by the cost of living index for Boston (128.6).

$53,000 / 113.7 = $466.48
$466.48 x 128.6 = $59,945.01

Therefore, a salary offer of $53,000 in Los Angeles could buy $59,945.01 worth of goods and services in Boston, which is more than the offered salary of $50,000. Choice C is the correct answer.

When Comparing the Buying Power of a Salary Offer of $50,000