A dozen eggs cost $0.88 in January 1980 and $2.11 in January 2015. The average wage for…
A dozen eggs cost $0.88 in January 1980 and $2.11 in January 2015. The average wage for production workers was $7.58 per hour in January 1980 and $19.64 in January 2015.
a. By what percentage did the price of eggs rise?
b. By what percentage did the wage rise?
c. In each year, how many minutes did a worker have to work to earn enough to buy a dozen eggs?
d. Did workers’ purchasing power in terms of eggs rise or fall?
The chapter explains that Social Security benefits are increased each year in proportion to the increase in the CPI, even though most economists believe that the CPI overstates actual inflation.
a. If the elderly consume the same market basket as other people, does Social Security provide the elderly with an improvement in their standard of living each year? Explain.
b. In fact, the elderly consume more healthcare compared to younger people, and healthcare costs have risen faster than overall inflation. What would you do to determine whether the elderly are actually better off from year to year?