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If an increase of 10% in prices. the rise in wages is 20% , then the real wages have increased by 10%?
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If an increase of 10% in prices. the rise in wages is 20% , then the r...
Introduction:
When prices increase by 10% and wages increase by 20%, it is important to understand how this affects the real wages of individuals. Real wages refer to the purchasing power of wages, which takes into account the changes in prices. In this scenario, we will analyze whether the increase in wages compensates for the increase in prices, resulting in a real wage increase of 10%.

Explanation:
To determine the impact on real wages, we need to compare the percentage change in wages with the percentage change in prices. Let's break down the calculation step by step:

Step 1: Calculate the percentage change in prices:
An increase of 10% in prices means that the prices have risen by 10%. Mathematically, the percentage change in prices can be calculated using the following formula:

Percentage Change in Prices = (New Price - Old Price) / Old Price * 100

Step 2: Calculate the percentage change in wages:
An increase of 20% in wages means that the wages have risen by 20%. Similarly, the percentage change in wages can be calculated using the following formula:

Percentage Change in Wages = (New Wage - Old Wage) / Old Wage * 100

Step 3: Compare the percentage changes:
Now, we compare the percentage change in wages with the percentage change in prices to determine the impact on real wages.

If the percentage change in wages is higher than the percentage change in prices, it indicates that wages have increased at a higher rate than prices, resulting in a real wage increase. Conversely, if the percentage change in wages is lower than the percentage change in prices, it indicates that prices have increased at a higher rate than wages, resulting in a real wage decrease.

Step 4: Calculate the change in real wages:
If the percentage change in wages is higher than the percentage change in prices, we can calculate the change in real wages using the following formula:

Change in Real Wages = Percentage Change in Wages - Percentage Change in Prices

Conclusion:
In this scenario, the percentage change in wages is 20% and the percentage change in prices is 10%. Since the percentage change in wages is higher than the percentage change in prices, it indicates that wages have increased at a higher rate than prices. Therefore, the change in real wages would be:

Change in Real Wages = 20% - 10% = 10%

Hence, the real wages have increased by 10%.
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If an increase of 10% in prices. the rise in wages is 20% , then the real wages have increased by 10%?
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