On the Planet Homogenia Every Consumer Who Has Ever Lived

question 1

Multiple Choice

On the planet Homogenia every consumer who has ever lived consumes only two goods, x and y, and has the utility function U(x, y) = xy. The currency in Homogenia is the fragel. In this country in 1900, the price of good 1 was 1 fragel and the price of good 2 was 2 fragels. Per capita income was 108 fragels. In 2000, the price of good 1 was 3 fragels and the price of good 2 was 4 fragels. The Laspeyres price index for the price level in 2000 relative to the price level in 1900 is

• A) 2.33.
• B) 2.50.
• C) 4.
• D) 3.50.
• E) not possible to determine from this information.

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Definitions:

Reye's Syndrome

A rare but serious condition that causes swelling in the liver and brain, often occurring in children recovering from a viral infection who have been given aspirin.

Autonomic Nervous System

The part of the nervous system that controls involuntary actions of the muscles and glands, influencing functions like heart rate and digestion.

Sympathetic

Pertaining to the sympathetic nervous system, which readies the body for action, or showing feelings of pity and sorrow for someone else's misfortune.

Parasympathetic

Referring to the part of the autonomic nervous system responsible for conserving energy and slowing down the heart rate.