Mavis Corporation has an agreement with its workers to completely index the wages of its employees to inflation in the CPI. Mavis currently pays its production line workers $10 an hour and is scheduled to index their wages today. If the CPI is currently about 120 and was 100 a year ago, by how much should Mavis increase the hourly wages of its workers?

Question

Quizplus · Accepted Answer

The CPI has increased from 100 to 120, which is a 20% increase. Therefore, Mavis should increase the wages by 20% of $10, which is $2.00.

Mavis Corporation Has an Agreement with Its Workers to Completely