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The absolute brightness (i.e. number of photons per unit time for a fixed size detector) decreases as the square of the distance.

To prove this for yourself, think of the photons passing through the surface of a sphere of radius $r$. The surface area is $4pi r^2$, proportional to the square of the radius.

So if the absolute brightness decreases by a factor of $10^6$ that means that the distance is a factor of $sqrt(10^6) = 10^3$ greater.

That makes the distant cepheid variable $10^3*10^3 = 10^6$ parsecs away.

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