Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On the planet Homogenia every consumer who has ever lived consumes only two goods, x and y , and has the utility function U (

On the planet Homogenia every consumer who has ever lived consumes only two goods, x and y, and has the utility function U(x, y) = xy. The currency in Homogenia is the fragel. In this country in 1900, the price of good 1 was 1 fragel and the price of good 2 was 2 fragels. Per capita income was 84 fragels. In 2000, the price of good 1 was 3 fragels and the price of good 2 was 4 fragels. The Laspeyres price index for the price level in 2000 relative to the price level in 1900 is

A. 2.50

B. 3.50

C. 2.33

D. 4

E. not possible to determine from this information

Step by Step Solution

There are 3 Steps involved in it

Step: 1

The detailed answer for the above question is provided below The correct answer is C 233 Heres how t... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Microeconomics

Authors: Hal R. Varian

9th edition

978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968

More Books

Students also viewed these Economics questions

Question

23. What causes astigmatismpg109

Answered: 1 week ago