Let Us Reconsider the Case of Ronald in Problem 4

question 22

Multiple Choice

Let us reconsider the case of Ronald in Problem 4. 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 $3, and his current consumptions of good 1 and good 2 are 25 and 20 respectively, what is the Laspeyres price index of current prices relative to base year prices? (Pick the most nearly correct answer.)

• A) 1
• B) 1.67
• C) 0.75
• D) 2.83
• E) 2.50

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Definitions:

Behavioral Contrast

The phenomenon where the rate of response to a stimulus changes significantly when the conditions of reinforcement for another stimulus are modified.

Lack of Money

The state of not having sufficient monetary resources, which can affect one’s ability to satisfy basic needs or attain certain goals.

Generalization Gradient

A measure of the degree to which a conditioned response is elicited by stimuli that resemble the original conditioned stimulus.

Color-blind Monkeys

Primates that lack the ability to distinguish certain colors, used in research to understand color vision and perception.