On the Planet Hyperion Every Consumer Who Has Ever Lived

On the planet Hyperion every consumer who has ever lived has a utility function U(x, y) = min{x, 2y}. The currency of Hyperion is the doggerel. In 1850 the price of x was 1 doggerel per unit and the price of y was 2 doggerels per unit. In 2000, the price of x was 10 doggerels per unit and the price of y was 4 doggerels per unit. The Paasche price index of prices in 2000 relative to prices in 1850 is

A) 6.
B) 4.67.
C) 2.50.
D) 3.50.
E) not possible to determine without further information.

Correct Answer:

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