Question

Caroline lives in City A and earns $50,000 per year. The cost of living index in City A is .8. She is considering a move to City B which has a cost of living index of .9. How large a salary will she require in City B to maintain her current standard of living?

Answer 1

Answer:

$56,250

Explanation:

(0.9 × $50,000) / 0.8 = $56,250

The cost of living is higher in city B compared to city A, thus, the amount of income needed to sustain the same living standard ought to be higher.

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