Question

You are offered two jobs, one in Richmond, Virginia, paying $67,000, and one in San Diego, California, paying $79,000. The price index in Richmond is 104.5, and in San Diego it is 132.3. If real wages are the only consideration, then:

Answer 1

Answer:If real wages are the only consideration, then:The best decision is to go for the job in Richmond, Virginia since real wage is higher there

Step-by-step explanation:

Given that

Richmond, Virginia is paying $67,000 as Nominal wage

price index in Richmond is 104.5

San Diego, California is paying $79,000 as Nominal Wage

price index in San Diego it is 132.3

Now To find the real wage is given as nominal wage rate/ CPI X 100

Real wage in Richmond, Virginia = $67,000/ 104.5 x 100 =$64,114.83 rounded to $64,115

Real wage in San Diego, California = $79,000/132.3 x 100=$59,712.77 rounded to $59,713

The best decision is to go for the job in Richmond, Virginia since real wage is higher there.