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 $5 and good y cost $1.The current price of good x is $7 and the current price of good y is $6.In 1991 the consumption bundle was (x, y) = (2, 4) .The current consumption bundle is (x, y) = (5, 3) .The Laspeyres index of current prices relative to 1991 prices is closest to which of the following numbers?

A) 3.79
B) 2.71
C) 0.26
D) 1.89
E) 1.26