Question

The Cost of Living in Selected U.S. Cities Cost-of-living index City number New York (Manhattan) 216.7 San Francisco, CA 164.0 Washington, DC 140.1 Los Angeles, CA 136.4 Boston, MA 132.5 Philadelphia, PA 126.5 Seattle, WA 121.4 Chicago, IL 116.9 Richmond, VA 104.5 Phoenix, AZ 100.7 Detroit, MI 99.4 Atlanta, GA 95.6 Charlotte, NC 93.2 Dallas, TX 91.9 Source US Census Annual Average 2010 The table shown here gives a cost-of-living index for 14 different cities. Currently, you are living and working in Atlanta and earning 590000 per year, but you are considering a move to Manhattan. In order to have the same standard of living in Manhattan, you would need to earn $ . (Note: Round this to the nearest dollar.)

Answer 1

Cost of living index shows the relative cost of living in different cities.

As we can see :-

Atlanta GA has the cost of living index = 95.6

Manhattan (New York) has cost of living index = 216.7

So, Relative cost of living in Manhattan to Atlanta GA = 216.7 / 95.6

So, Living in Manhattan is 216.7/95.6 times expensive than that of living in Atlanta.

So, If you are earning $90,000 in Atlanta then you need to earn (216.7/95.6) * $90,000 to live in Manhattan.

(216.7/95.6) * $90,000 = (216.7 * $90,000) / 95.6

= $19503000/95.6

= $2,04,006.2761

= $2,04,006

In order to have the same standard of living in Manhattan, you would need to earn $ 2,04,006