On the Planet Hyperion Every Consumer Who Has Ever Lived

question 16

Multiple Choice

On the planet Hyperion every consumer who has ever lived has a utility function U(x, y) = min{x, 2y}. The currency of Hyperion is the doggerel. In 1850 the price of x was 1 doggerel per unit and the price of y was 2 doggerels per unit. In 2000, the price of x was 10 doggerels per unit and the price of y was 4 doggerels per unit. The Paasche price index of prices in 2000 relative to prices in 1850 is

• A) 6.
• B) 4.67.
• C) 2.50.
• D) 3.50.
• E) not possible to determine without further information.

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Definitions:

Correlation

A numerical metric showing how much two or more variables change in relation to each other.

Statistically Significant

A term used to denote that the likelihood of an observed effect or relationship occurring by chance is very low.

Squaring the Value

The mathematical operation of multiplying a number by itself to get its square.

Experimental Conditions

Experimental conditions refer to the controlled variables, settings, or environments established by researchers in an experiment to investigate the effects on the subject's behavior or condition.