Question

2. Suppose once you graduate you get two job offers, one in Austin and another in Miami. The job in Austin pays annual salary of $110,000 and the job in Miami pays $108,000. You look up CPI tables published by BLS and find out that CPI in Austin area in 2020 is 215 and CPI in Miami area in 2020 is 230.

a. You like Miami more than Austin but the pay is an important decision variable as well. Considering differences in cost of living, if you could negotiate, how much more on top of the current offer would you ask to Miami employer so that they are just matching Austin’s offer?

b. If you decided to move to Austin, how much would you need to earn in Austin to have the same standard of living as you could for $108,000 in Miami, considering differences in cost of living?

Answer 1