Assignment task: Show necessary steps and reasoning that lead to the answers. No credits will be given to answers without such steps and reasoning.
John has two job offers:
- Company A in NYC offers him $80,000
- Company B in Indy offers him $48,000
John likes these two jobs equally and he is indifferent between a quieter life and a glamorous city life. His dad, Bob tries to help him make decision. He has come across some CPI data for cities in the US in a magazine one day;
CPI in NYC is 120 and CPI in Indy is 80.
Q1. Calculate the real income for each city given the offers. Which offer is better for John?
Q2. How much does John have to make in NYC to have the same purchasing power as he would in Indy with $48,000?