Suppose X & Y are 1-2 perfect substitutes, i.e. the consumer's satisfaction from every unit of X is twice of a unit of Y. Suppose in 2009 , PX = 3, PY = 2 and the consumer income is $12. In 2010, PX = 2.5, PY = 1.
a) Write down the utility function.
b) What is the ideal price index?
c) What is the Laspeyres price index?
d) Calculate ideal and Laspeyres indices if U(X, Y) = Min (2X, Y)