Mavis is offered a Job in Minneapolis that pays $80,000.She is offered a similar job in Memphis that pays $64,000.Which pair of CPIs would make the two salaries have the same purchasing power?

Question

Quizplus · Accepted Answer

To make the two salaries have the same purchasing power, we need to adjust the lower salary in Memphis using the CPI. Let X be the CPI in Memphis that we are looking for. Then we have:

$64,000 * (X/100) = $80,000

Simplifying this equation, we get X = 125.

Therefore, we need to find a pair of CPIs such that the CPI in Minneapolis is 125% of the CPI in Memphis. Checking the options, we find that choice B satisfies this condition: 90 in Minneapolis is 125% of 72 in Memphis. Therefore, the answer is B.

Mavis Is Offered a Job in Minneapolis That Pays $80,000