Let Us Reconsider the Case of Ronald in Problem 4

question 9

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

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Definitions:

Catharsis

The process of releasing, and thereby providing relief from, strong or repressed emotions.

Emotion

A complex reaction pattern, involving experiential, behavioral, and physiological elements, by which an individual attempts to deal with a personally significant matter or event.

Psychodynamic

Pertaining to a psychological perspective that emphasizes the interplay of unconscious and conscious forces in shaping personality, behavior, and thought processes.

Personality

A combination of characteristics or qualities that form an individual's distinctive character.