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    Rate of change

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    U(x,y)=X(square)Y
    Px=$1.60
    Py=$8
    I=$90
    calculate the rate of change in the cost of living for the consumer using the
    a. laspeyeres Index (cpi
    b. paasche index (gdp deflator)
    c. true index (ideal index)
    d. if the consumer's income had increased to I=$96 per period, is the consumer better off or worse off than before?

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    https://brainmass.com/economics/income-distribution/rate-change-reactions-68463

    Solution Preview

    See the attached file. Thanks

    Rate of change

    U(x,y)=X(square)Y
    Px=$1.60
    Py=$8
    I=$90
    calculate the rate of change in the cost of living for the consumer using the
    a. laspeyeres Index (cpi
    This is continuation of previous questions. We need to use the data from the previous question.

    Given or known from earlier part
    Px0=2.00
    Px1=1.60
    Py0=5.00
    Py1=8.00
    Qx0=30
    Qy0=6
    PL = (1.60*30+8.00*6)/(2.00*30+5.00*6) = 1.0667

    b. paasche ...

    Solution Summary

    Rate of change is considered. The cost of living for the consumers using different indexes are discussed.

    $2.19