Iggie took a university teaching job as an assistant professor in 1980 at a salary of $15,000. By 2011, she had been promoted to full professor, with a salary of $70,000. If the price index was 82 in 1980 and 225 in 2011, then what is Iggie's 2011 salary in 1980 dollars

$25,511.11

Explanation:

Iggie's salary in 1980 dollars = (salary / 2011 price index) x 1980 price index = ($70,000 / 225) x 82 = $25,511.11

The price index shows us how much the value of money has changed over time. In this case, $82 in 1980 could purchase X goods. In 2011, you would need $225 in order to be able to purchase the same amount of X goods.

answer; is usually (less than) the socially optimal level of consumption;

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