On the Planet Hyperion, Every Consumer Who Has Ever Lived

question 50

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

• A)4.
• B)3.
• C)2.
• D)5.
• E) It is not possible to determine the Paasche price index without further information.

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Definitions:

Unit Cost

The cost assigned to a single unit of product, calculated by dividing the total cost by the number of units produced.

Manufacturing

The process of converting raw materials or components into finished goods through the use of tools, human labor, and machinery.

Financial Accounting

The field of accounting that provides economic and financial information for investors, creditors, and other external users.

Raw Materials

Basic materials that are used in the production of goods, which have not yet been processed or manufactured.