Question

Iggie took a university teaching job as an assistant professor in 1974 at a salary of $10,000. By 2003, she had been promoted to full professor, with a salary of $50,000. If the price index was 50 in 1974 and 180 in 2003, then what is Iggie's 2003 salary in 1974 dollars?

a. $2,777.78
b. $18,000
c. $26,000
d. $36,000

Answer 1

d. $36,000

Step-by-step explanation:

In this question, we use the proportionate method to find out the salary in 2003 which is shown below:

= Salary in 1974 × (Price index in 2003 ÷ price index in 1974)

= $10,000 × (180 ÷ 50)

= $10,000 × 3.6

= $36,000

We considered the 1974 salary, the price index is 2003 and the price index in 1974 to find out the accurate salary of 2003