Caroline lives in City A and earns $40,000 per year. The cost of living index in City A is 80. She is considering a move to City B which has a cost of living index of 90. How large a salary will she require in City B to maintain her current standard of living

Question

Business

Ethen Brock

30 April, 20:35

Caroline lives in City A and earns $40,000 per year. The cost of living index in City A is 80. She is considering a move to City B which has a cost of living index of 90. How large a salary will she require in City B to maintain her current standard of living

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Answers (1)

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Kameron Archer · Answer 1

Caroline will have to earn $45,000 to maintain her standard of living in city B

Explanation:

Cost of living index compared cost of living in different locations. It measures the prices of goods and services offered in a location over time.

For city A the index she earns $40,000 at 80 cost of living index

Therefore she will earn x at city B with 90 cost of living index.

Cross multiply

80x = 90*40,000

x = (90*40,000) / 80

x = $45,000

Caroline will have to earn $45,000 to maintain her standard of living in city B