Consider the Following Price (In Dollars)and Quantity Data for Two

question 45

Short Answer

Consider the following price (in dollars)and quantity data for two items during 2010 and 2011. If the value of the Laspeyres price index for 2011,using 2010 as the base year,is 89.46,find the price of item 1 in 2011.

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Definitions:

Productive Efficiency

Productive efficiency occurs when an economy or entity produces goods and services at the lowest possible cost, utilizing all available resources without waste.

MB = MC

The principle that optimal decision-making is achieved when the marginal benefit equals the marginal cost.

Unintended Consequences

Outcomes of a policy or action that were not foreseen or intended, often contrary to the original objectives.

Allocating Resources

The process of distributing available resources among various competing needs or projects in an efficient manner.