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 130.6 for Boston and 114.9 for Los Angeles.

Question

Quizplus · Accepted Answer

To compare the buying power of the two offers, we need to adjust them for cost of living differences between the two cities. We can do this using the cost of living index for each city.

The ratio of the cost of living index for Boston to Los Angeles is:

130.6 / 114.9 = 1.136

This means that goods and services in Boston are about 13.6% more expensive than in Los Angeles. To adjust the $53,000 offer in Los Angeles to its equivalent in Boston, we can multiply by this ratio:

$53,000 * 1.136 = $60,208

Rounding to the nearest dollar, we get $60,241.

Therefore, the Los Angeles salary offer could buy $60,241 worth of goods and services in Boston assuming the given cost of living indices.

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