Question

Financial aspects of employment: Comparing salaries and costs by city

Formulas for Comparing Salaries and Buying Power by City

The area that you chose to live and work in will have an important impact on your income. The cost of living in a city, for example, would be higher than living in a rural area, and cities’ costs vary across the country. City indices can be found on the Internet to compare salaries and buying power.

Fill in the formula for comparing salaries by city:

Equivalent Salary in City 2

= Index in City 1/Index in City 2 =

Salary in City 1

Fill in the formula for comparing buying power by city:

Equivalent Buying Power in City 1

= Index in city 2/Index in City 1 =

Buying Power in City 2

Think about whether your answer makes sense. If you are converting a salary from a low index city to a high index city, the salary would be higher in the high index city. And if you are comparing a salary in a high index city to a low index city, you would expect your converted salary to be lower in the low index city.

If you are converting buying power, the buying power in a high index city will be less than the buying power in a low index city. For example, $1,000 in Cleveland, where the city index is 99, would purchase an equivalent amount of goods and services as $________ in Boston, where the city index is 151. (Round your answer to the nearest whole dollar)

I cannot Figure out the solution to the last problem. Can you please help me understand how to do this? I cannot find it anywhere in my textbook.

Answer 1