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:

Submissive

A behavioral trait characterized by a tendency to yield to the authority or will of others.

Groupthink

The tendency for members of a tightly knit group to be more concerned with preserving group solidarity and uniformity than with objectively evaluating all alternatives in decision making.

Social Psychology

Social psychology is the scientific study of how people's thoughts, feelings, and behaviors are influenced by the actual, imagined, or implied presence of others.

Violent Revenge

Actions taken with the intent of causing harm or injury in response to a real or perceived wrongdoing.