On the Planet Homogenia Every Consumer Who Has Ever Lived

question 18

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 60 fragels.In 2000, the price of good 1 was 5 fragels and the price of good 2 was 3 fragels.The Laspeyres price index for the price level in 2000 relative to the price level in 1900 is

• A)2.67.
• B).5.75.
• C)4.
• D).3.25.
• E).not possible to determine from this information.

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Definitions:

S-Cam Actuated Brakes

A type of drum brake system where an S-shaped cam is used to push brake shoes apart and against the brake drum to stop a vehicle.

Wedge Brakes

An air foundation brake system in which an air chamber forces a wedge between brake shoes forcing them into a brake drum to effect retarding force. Wedge brakes are usually actuated on both sides (unlike S-cam brakes) and so have higher theoretical braking efficiencies.

Maintenance Costs

The expenses associated with keeping an item, equipment or property in its best operating condition, including repairs, replacements, and routine check-ups.

Dry Cement

A powdery substance made by calcining lime and clay, used with water to make concrete, mortar, or plaster.