Remember That the Laspeyres Price Index Uses the Old Quantities

Multiple Choice

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