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Assel receives utility from consuming food F and clothing C. Her utility function is given byU(F,C)=F^1/2C^1/2

The Marginal rate of substitution (of food for clothing) for this utility function isMRS=C/F

MRS=C/F. Suppose that Assel's income in 1990 was $1200 and that the prices of good and clothing were $1 per unit of each good. By 2000, however, the price of food has increased to $2 and the price of clothing to $3.

Calculate the ideal cost-of-living and Laspeyres indexes for Assel in the year 2000. As usual, use a precision of 4 decimals in your calculations and when writing your answers.

1) The Laspeyres cost-of-living index is:

2) The ideal cost-of-living index is: