Let Us Reconsider the Case of Ronald in Problem 4

question 16

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 $1, 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)0.25
• B)0.67
• C)0.50
• D)1.50
• E)1

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Definitions:

Technology

The application of scientific knowledge for practical purposes, especially in industry and in our daily lives through devices, processes, and systems.

Cross-Pollinated Seeds

Seeds that result from the transfer of pollen from the flower of one plant to the flower of another plant of the same species.

Scientific Theory

A well-substantiated explanation of some aspect of the natural world that is acquired through the scientific method and repeatedly tested and confirmed through observation and experimentation.

Biodiversity

The variety and variability of life forms within a given ecosystem, biome, or on the entire Earth, important for the stability and resilience of ecosystems.