Remember that the Laspeyres price index uses the old quantities for the weights.In 1991, good x cost $2 and good y cost $1.The current price of good x is $6 and the current price of good y is $2.In 1971 the consumption bundle was (x, y)= (3, 6).The current consumption bundle is (x, y)= (6, 4).The Laspeyres index of current prices relative to 1991 prices is closest to which of the following numbers?
A)2.50
B)3.67
C)2.75
D)0.27
E)1.27

Question

Quizplus · Accepted Answer

The Answer of Remember that the Laspeyres price index uses the old quantities for the weights.In 1991, good x cost $2 and good y cost $1.The current price of good x is $6 and the current price of good y is $2.In 1971 the consumption bundle was (x, y)= (3, 6).The current consumption bundle is (x, y)= (6, 4).The Laspeyres index of current prices relative to 1991 prices is closest to which of the following numbers?
A)2.50
B)3.67
C)2.75
D)0.27
E)1.27

Remember That the Laspeyres Price Index Uses the Old Quantities