During a particular period the cost of living index increases from 120 to 210 and the daily wages of a worker in a factory was also increased from Rs 70 to Rs 115.Is the worker actually gained,if yes,by how much in real terms?
Answers
No, the worker did not gained.
Explanation:
The cost of living index increases or rises from 120 to 210
The daily wages of the worker in the factory should rise to, which is computed as:
Daily wages = Old Daily wages × New Cost of living index / Old cost of living index
= 70 × 210 / 120
= 14,700 / 120
= Rs 122.5
But the daily wage of the worker in the factory risen to Rs 120. Though the worker did not gain in the real term and the real wages decreased to:
= 115 × 120 / 210
= 13,800 / 210
= Rs 65.71
Therefore, the real wage of the worker is Rs 65.71, which got decreased from Rs 70, before the rise in the price.
Cost of living index increases from 120 to 210.
Daily wages of a worker in a factory should increase to
=70*210/120
=122.5
but the daily wages of a worker in a factory increased to 120 rs.
thus, the worker didn't gain and the real wages have decreased to
=115*120/210=65.71
The real wage of the worker is Rs 65.71 as compared to Rs 70 before the rise in the price.