Minneapolis, MN has a CPI of 173. Anchorage, AK has a CPI of 226. How does the purchasing power of someone in Minneapolis earning a salary of $42,500 compare to the purchasing power of someone in Anchorage earning a salary of $67,000?
Answer
A
The person living in Minneapolis has $57.61/CPI more than the person in Anchorage.
B
The person living in Minneapolis has $130.45/CPI more than the person in Anchorage.
C
The person living in Anchorage has $50.80/CPI more than the person in Minneapolis.
D
The person living in Anchorage has $90.82/CPI more than the person in Minneapolis.
Explanation
Compare purchasing power by dividing each salary by its city’s CPI. Minneapolis: $42,500 ÷ 173 ≈ $245.66 per CPI point; Anchorage: $67,000 ÷ 226 ≈ $296.46 per CPI point. The difference is about $296.46 − $245.66 = $50.80, so the person in Anchorage has $50.80/CPI more purchasing power.
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