Cost of Living Index Comparison: Boston vs. Los Angeles

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Economics
Name:
Date

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1.
Comparison of cost of living index between
2 city
Item Boston Los Angeles
Cost of living index 139 131
The cost of living indicates the percentage difference in the cost of living between your
location and another. It is helpful in comparing the international locations as it
compensates exchange rates differences. If the cost of living index is higher than the
cost of index where you are living then it is the expensive, hence a higher cost of living
index is the expensive and lower cost of living index is cheaper. The cost of living index
of Boston and Los Angeles is 139 and 131, and the given cost of living index of
Melbourne and Florida IS 90.22, Which shows that the cost of living index of Boston and
Los Angeles are higher and hence expensive in comparison of Melbourne (Shell, and
Fisher, 2017).

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2
Calculation of the
nominal salary of the
Boston and Los
Angeles
Formula
Nomin
al
salary
($)
(nominal salary of Melbourne /cost of
living of index of Melbourne)*cost of
living of index of Boston
92440.
7
(nominal salary of Melbourne /cost of
living of index of Melbourne)*cost of
living of index of Los Angeles
87120.
37
Working Notes
cost of living index of Melbourne 90.22
cost of living index of Boston 139
cost of living index of Los Angeles 131
nominal salary of Melbourne $60,000
By the above calculation as per unitary method, the nominal salary of Boston and Los
Angeles are $ 92440.7 and $ 87120.37. Hence it is calculated with the help of a given
cost of living index and offered salary in Melbourne, therefore by taking the given data
of Melbourne the nominal salary of Boston and Los Angeles is calculated (Baker, 2016).

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3.
As per the above calculation in question 1st and 2nd the cost of living of index is
calculated. And the city is also hypothesized.

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References:
Baker, D. (2016). Getting Prices Right: Debate Over the Consumer Price Index: Debate
Over the Consumer Price Index. Routledge.
Shell, K. and Fisher, F.M. (2017). Taste and Quality Change in the Pure Theory of the
True Cost-of-Living Index. In Value, Capital and Growth (pp. 97-140). Routledge.