On the Planet Hyperion Every Consumer Who Has Ever Lived

question 21

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 4 doggerels per unit and the price of y was 4 doggerels per unit. Paasche price index of prices in 2000 relative to prices in 1850 is

• A) 1.
• B) 2.67.
• C) 2.
• D) 3.
• E) not possible to determine without further information.

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Definitions:

Kahneman's Capacity Model

A cognitive theory proposed by Daniel Kahneman that outlines the limited capacity of the human brain to engage in multiple tasks, emphasizing the allocation of cognitive resources between competing demands.

Mental Resources

Cognitive capacities or energy dedicated to processing information, reasoning, and memory, crucial for performing mental tasks and decision-making.

Filter Theory

A theory of attention proposing that information that exceeds the capacity of a processor to process at any given time is blocked from further processing.

Unattended Information

Information that is present in the environment but is not the focus of one's attention or conscious awareness.