This table shows the price-level adjustment as compared to the United States.
According to the information given in the table shown,if someone makes $40,000 in the U.S. ,what would his salary need to be in Mexico to maintain the same standard of living?

Question

This table shows the price-level adjustment as compared to the United States. 
According to the information given in the table shown,if someone makes $40,000 in the U.S. ,what would his salary need to be in Mexico to maintain the same standard of living?

Quizplus · Accepted Answer

From the table, we can see that the price-level adjustment for Mexico is 0.66. This means that prices in Mexico are 34% lower than in the United States. To maintain the same standard of living, the person would need to make 100/0.66 = 151.52% of their U.S. salary.

Therefore, the salary needed in Mexico would be $40,000 x 1.5152 = $60,608. However, we need to adjust for the lower prices in Mexico, so we need to divide this by 0.66.

So, the salary needed in Mexico to maintain the same standard of living would be $60,608/0.66 = $26,400. Therefore, the correct answer is B) $26,400.

This Table Shows the Price-Level Adjustment as Compared to the United