If Kim's Salary Was $50,000 Last Year, and This Year

question 169

Multiple Choice

If Kim's salary was $50,000 last year, and this year she receives a cost-of-living increase tied to the consumer price index (CPI) , what will her salary be this year assuming the CPI has risen from 110 to 114?

• A) $49,114
• B) $50,114
• C) $50,300
• D) $51,818

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Definitions:

Marginal Cost

The cost added by producing one additional unit of a product, focusing on changes in overall cost with slight increases in production.

Sunk Costs

Costs that have already been incurred and cannot be recovered.

Marginal Analysis

The examination of the benefits and costs of an additional unit of consumption or production to make decisions on allocations of resources.

Risk Aversion

The behavior of preferring to avoid loss rather than making a gain, reflecting a preference for certainty over uncertainty.