In periods 0 and 1, Ralph consumed two goods, x₁and x₂, and his utility functions in the two periods were identical. In period 0 the prices of x₁and x₂were $2 and $1 respectively, and Ralph consumed 10 units of x₁and 80 units of x₂. In period 1 the prices of x₁and x₂were identical, and equal to $1. If Ralph consumed 40 units of x₁and 40 units of x₂in period 1, then the Paasche price index is: A)3/2. B)10/9. C)2/3. D)9/10.

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The Answer of In periods 0 and 1, Ralph consumed two goods, x₁and x₂, and his utility functions in the two periods were identical. In period 0 the prices of x₁and x₂were $2 and $1 respectively, and Ralph consumed 10 units of x₁and 80 units of x₂. In period 1 the prices of x₁and x₂were identical, and equal to $1. If Ralph consumed 40 units of x₁and 40 units of x₂in period 1, then the Paasche price index is: A)3/2. B)10/9. C)2/3. D)9/10.

In Periods 0 and 1, Ralph Consumed Two Goods, X1

In Periods 0 and 1, Ralph Consumed Two Goods, X₁