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In year 1, the price of health care is $130 and the price of other goods is $250. At the year 1 prices, you demand
In year 1, the price of health care is $130 and the price of other goods is $250. At the year 1 prices, you demand 30 units of health care and 35 units of other goods. In year 2, health care becomes more expensive at $150, while other goods become cheaper at $2000. Calculate the Laspeyres price index for the price changes from year 1 to year 2 and interpret your findings in terms of what happened to prices overall.
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