The Laspeyres Index of Prices in Period 2 Relative to Period

question 39

True/False

The Laspeyres index of prices in period 2 relative to period 1 tells us the ratio of the cost of buying the period 1 bundle at period 2 prices to the cost of buying the period 1 bundle at period 1 prices.

---

Definitions:

Production Function

An economic model that describes the relationship between inputs used in production and the resulting output.

Average Cost

The total cost of production divided by the number of goods produced, also known as cost per unit.

Copper

A reddish-brown, malleable, ductile metallic element with high electrical and thermal conductivity, used in many alloys and as electrical conductors.

Zinc

A metallic chemical element with the symbol Zn and atomic number 30, used in alloys and as a protective coating for iron and steel.