5-15 An engineer in 1950 was earning $5,300 a year. Today she earns $53,000 a ye

Question

5-15

An engineer in 1950 was earning $5,300 a year. Today she earns $53,000 a year. However, on average, goods today cost 8.1 times what they did in 1950. What is her real income today in terms of constant 1950 dollars? (Round your answer to 2 decimal places.)

  Today's real income

   $   

An engineer in 1950 was earning $5,300 a year. Today she earns $53,000 a year. However, on average, goods today cost 8.1 times what they did in 1950. What is her real income today in terms of constant 1950 dollars? (Round your answer to 2 decimal places.)

Explanation / Answer

Today’s income = $ 53,000

Today’s cost 8.1 times as compare to 1950.

Earning in 1950 with respect to today’s income = $53,000/8.1 = $ 6543.20 .

So her real income increased by $ 6543.21 – $ 5,300 = $ 1,243.21

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