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Author Question: For each city across the U.S., economists construct a price index for a similar basket of goods. In ... (Read 37 times)

Yolanda

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For each city across the U.S., economists construct a price index for a similar basket of goods. In Los Angeles the index is 127.3 and the index for Dallas is 94.8.
 
  If you have been offered 137,000 for a job in Los Angeles and 117,000 for a similar job in Dallas, which job affords you the highest purchasing power of the bundle of goods in the price index? Use the Los Angeles value as the base.

Question 2

Refer to Scenario 7.1. For 100 cookies, the average total cost is
 
  A) falling.
  B) rising.
  C) neither rising nor falling.
  D) less than average fixed cost.



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Jayson

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Answer to Question 1

Real valueDallas = 127.3(117,000)/94.8 = 157,111. This exceeds the real 137,000 salary for the job in Los Angeles. The Dallas job provides higher purchasing power.

Answer to Question 2

A




Yolanda

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Reply 2 on: Jul 1, 2018
Great answer, keep it coming :)


ryansturges

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Reply 3 on: Yesterday
Wow, this really help

 

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