VI.1. Assume that in 2007 prices were (jumpy) = (3,2), and in 2008 they were (pg, p;) = (2,4). If the bundle of the representative consumer is (2, 2), and one mea- sures the CPI (consumer price index) using a Laspeyres Index, then the percentage change in prices is III 25% El 20% III 30% El 50%. VI.2. Assume that in 2007 prices were (pmpy) = (2,3), and in 2008 they were (14343;) = (3,4). If the bundle of a consumer in 2007 was (2,2), then his true CPI index is El less than 40% El exactly 40% III greater than 40% El undetermined. VI.3. Between 2009 and 2010 the prices of both goods, 33' and y, increased by 10%. If the consumer income increased by a rate equal to the consumer's true price index, then her budget line El shifted parallel towards the origin El rotated over its intersection with the :c-axis III shifted parallel away from the origin El maintained its position. VI.4. The prices of the goods .1: and y in the base period were (pm, pg) = (2, 2), and the optimal bundle of the representative agent was (55*,y'\") = (2,1). If the current prices are @;,p;,) = (1,4), then the Laspeyres CPI is DCPIL=1 EICPIL=1,66 IIICPIL=1,5 IIICPIL=0,8. VI.5. If a consumer's income is multiplied by the Laspeyres consumers price index, then El the consumer receives exactly the compensated variation El the consumer's budget set remains unchanged to be that of the base period III the consumer's welfare increases relative to that of the base period El the consumer's welfare remains unchanged to be that of the base period. VLG. A consumer's preferences are described by the utility function 1101:, y) = cry. The prices in the base period were (pm, pg) = (1, 1) and her optimal consumption bundle was (22*,y') = (1,1). If the current prices are 0);, 1);) = (1,4), then the dierence between her Laspeyres consumer price index (CPI) and her true CPI is: no; 130,2 n0,5 I:I1. VI.7. If a consumer's preferences are represented by the utility function u(:n,y) = 21: + y, her income is I = 4 and the prices are pa, = 10,, = 1, then the equivalent variation of a sales tax on 1 euro per unit of good :I: is: D0 Ell D2 D4