Respuesta :
Answer: The answer is as follows:
Explanation:
Given that,
Real entry-level wage declined by 6% between 2003 and 2010
2010 Nominal Entry-Level Wage = $13.50
2010 CPI = $170.2
2003 CPI = 142.5
(a) Real entry wage in 2010 = [tex]\frac{2010\ Nominal\ entry\ level\ wage}{2010\ CPI}[/tex]
= [tex]\frac{13.50}{170.2}[/tex]
= $7.93
The 2010 Real entry-wage level is $7.93
2010 real wage declined by 6% from 2003
( b) The 2003 real entry-wage level is $8.43
Therefore, real entry-level wage in 2003 = [tex]\frac{7.93}{94%}[/tex]
= $8.43
(c) 2003 nominal entry-level wage in CPI term = [tex]2003\ real\ entry\ wage \times \frac{2003\ CPI}{100}[/tex]
= [tex]8.43 \times \frac{142.5}{100}[/tex]
= $12.01
The 2003 nominal entry-wage is $ 12.01
The 2010 real entry-level wage will be $7.93; the 2003 real entry-level wage is $8.43 and 2003 nominal entry-level wage is $12.01 for college graduates.
How to calculate the entry-level wages?
Using the information given above, the real entry-level wage for the year 2010 will be calculated by using the formula given below as,
[tex]\rm Entry\ Level\ Wage\ 2010= \dfrac{Nominal\ Entry\ Level\ Wage}{CPI\ 2010} x\ 100\\\\\rm Entry\ Level\ Wage\ 2010= \dfrac{\$13.50}{\$170.2}x\ 100\\\\\rm Entry\ Level\ Wage\ 2010= \$7.93[/tex]
Now, for the year 2003,
[tex]\rm Real\ Entry\ Level\ Wage\ 2003= 2010\ Real\ Wage +Decline(\%)\\\\\rm Real\ Entry\ Level\ Wage\ 2003= 7.93 + 6\%\\\\\rm Real\ Entry\ Level\ Wage\ 2003= \$8.40[/tex]
Now calculating the nominal entry-level wages for the year 2003,
[tex]\rm Nominal\ Entry\ Level\ Wage\ 2003= Real\ Entry\ Level\ Wage\ x \dfrac{2003\ CPI}{100}\\\\\rm Nominal\ Entry\ Level\ Wage\ 2003=8.43\ x\ \dfrac{142.5}{100}\\\\\rm Nominal\ Entry\ Level\ Wage\ 2003= \$12.01[/tex]
Hence, the 2010 real entry-level wage will be $7.93; the 2003 real entry-level wage is $8.43 and 2003 nominal entry-level wage is $12.01 for college graduates.
Learn more about entry level wage rates here:
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