Final answer:
To compare job offers in different cities based on the cost of living, one must adjust the salary using the cost of living equation with CPI. The living wage example illustrates the influence of wage policies on employment dynamics.
Step-by-step explanation:
The question given entails using a cost of living equation to compare job offers in different cities by adjusting the salary in one city based on the cost of living index in both cities. To accomplish this, we use the given rise in cost of living, which is calculated as the percentage increase using the Consumer Price Index (CPI). The CPI is a measure used to track the prices of goods and services purchased by a typical urban consumer, making it pertinent for adjustments in salary calculations to maintain the same standard of living across different cities.
To compare job offers using the cost of living equation, we need to know the salary in the original city (City 1) and the respective indices for the cost of living in both City 1 and City 2. The formula to calculate the equivalent salary in City 2 would then be:
Equivalent Salary in City 2 = Salary in City 1 × (Index for City 2 / Index for City 1)
The living wage law example provided highlights the impact of wage policies on employment and the labor market. It illustrates scenarios like the surplus of labor when a living wage is set above the equilibrium wage, affecting supply and demand.