In: Economics
(a)
Total compensation = Wage + Health benefits
(i)
Total compensation, 2000 ($) = 20 + 4 = 24
Total compensation, 2010 ($) = 21 + 9 = 30
% Change in total compensation = ($30 / $24) - 1 = 1.25 - 1 = 0.25 = 25%
(ii)
If average annual growth rate be r, then
$24 x (1 + r)10 = $30
(1 + r)10 = $30 / $24 = 1.25
Taking 10th root on each side,
1 + r = 1.0226
r = 0.0226
r = 2.26%