4. Do you think that incomes and purchasing power are related? Are companies required to pay their employees more to compensate for higher costs of living? How to read this chart (from NY Times):To better understand, imagine a store offering a range of goods andservices, each for sale at the national-average price for that particularitem. Now, imagine a shopping cart filled with $100 worth of itemsfrom that store. In Hawaii, $100 buys about 85 percent of the goods inthe cart thanks to the high prices there. In other words, $100 in Hawaiifeels more like $85.60, compared to the national average. InMississippi, the opposite is true. With $100, you would be able to buythe cart's contents and more: the equivalent of $115.30 of goods andservices from the national-average store.What data is used in this analysis (from NY Times)?The Regional Price Parities are calculated using data alreadycollected for another indicator, the Consumer Price Index, whichserves as a measure of inflation. For that index, the governmenttracks prices of more than 200 goods and services, including men'ssuits, college textbooks, cereal, electricity and cars and trucks. It alsotallies rents, which are particularly variable among states. The "realvalue" of $100 in rent can range from roughly $63 in Hawaii to $160 inArkansas.

Answer: Purchasing power: purchasing power refers to the number of goods and services that can be…

Answered: Do you think that incomes and…

Do you think that incomes and purchasing power are related? Are companies required to pay their employees more to compensate for higher costs of living?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 3SCQ: In an analysis of the market for paint, an economist discovers the facts listed below. State whether...

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