Question

I do not really understand how to get to the answer?

Answer 1

Given the information on the table, we can see the following increases on the minimum wage:

From 1980 to 1981 : 0.25

1981 to 1990: 0.45

1990 to 1996: 0.95

1996 to 1997: 0.4

1997 to 2007: 0.7

2007 to 2009:1.4

As we can see, the minimum wage has a tendency to grow with the passing of the years, but there is not a constant of growth. Therefore, we could use the mean of these increments, and use it to estimate the approximate minimum wage for 2020. First we get the mean of this 6 numbers:

`\mu=(0.25+0.45+0.95+0.4+0.7+1.4)/(6)=(4.15)/(6)=0.691`

We have that, in average, the minimum wage increased 0.691 from 1981 to 2009, then, an approximation for the current year would be the following:

`\begin{gathered} 2009\rightarrow7.25 \\ 2010\rightarrow7.94 \\ 2011\rightarrow8.63 \\ 2012\rightarrow9.32 \\ 2013\rightarrow10.01 \\ 2014\rightarrow10.70 \\ 2015\rightarrow11.39 \\ 2016\rightarrow12.08 \\ 2017\rightarrow12.72 \\ 2018\rightarrow13.46 \\ 2019\rightarrow14.15 \\ 2020\rightarrow14.84 \end{gathered}`

then, the minimum wage for the current year should be $14.84, because the mean of the increments of the given data would give us an approximate of $14.84