Consider the Case of Ronald

question 14

Multiple Choice

Consider the case of Ronald. Let the prices and consumptions in the base year be as in situation D, where p₁ = 3, p₂ = 1, x₁ = 5, and x₂ = 15. If in the current year, the price of good 1 is $1 and the price of good 2 is $2, and Ronald's current consumptions of good 1 and good 2 are 25 and 25 respectively, what is the Laspeyres price index of current prices relative to base year prices? (Pick the most nearly correct answer.)

• A) 1.17
• B) 2.50
• C) 0.75
• D) 0.50
• E) 1.75

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Definitions:

Execution

The process of running a program or command, whereby the code is carried out by the computer's CPU.

Try Block

A code structure used to handle exceptions, allowing a program to try executing code that might throw an error.

Catch Block

A section in try-catch statement in programming that captures and handles exceptions generated by the try block.

Exception Thrown

A term used in programming to describe an event that occurs during the execution of a program that disrupts the normal flow of instructions.