Price index uses the old quantities for the weights

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The Laspeyres price index uses the old quantities for the weights. In the base year, good 1 cost $2 and good 2 cost $1. The current price of good 1 is $7 and the current price of good 2 is $2. In the base year, the consumption bundle was (x1b,x2b) = (5,9). The current consumption bundle is (x1t,x2t) = (7,5). Which of the following is closest approximation of the Laspeyres index of current prices relative to base year prices?

Reference no: EM131110116

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