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A consumer has the following utility function: Ulx, y) = xy -y: *21 where x and y represents the quantities consumed of goods X and Y. y 20 What will be the substitution and income effects for X and Yassuming that the consumer attempts to maintain the same level of utility achieved before price of Y increased (that is, when price of Y was $1)? SE= +0.5 IE = -0.5 SE, = -0.25 IE = -0.25 SE= +0.293 IET = -0.293 SEy = -0.414 IEy = +0.414 SE= +0.25 IE = -0.25 SE = -0.75 IEy = -0.75 SEx= +0.414 IEx = -0.414 SEy = -0.293 IEr = -0.207 Income = $3 Px= $1, Py= $2

A consumer has the following utility function: Ulx, y) = xy -y: *21 where x and y represents the quantities consumed of goods X and Y. y 20 What will be the substitution and income effects for X and Yassuming that the consumer attempts to maintain the same level of utility achieved before price of Y increased (that is, when price of Y was $1)? SE= +0.5 IE = -0.5 SE, = -0.25 IE = -0.25 SE= +0.293 IET = -0.293 SEy = -0.414 IEy = +0.414 SE= +0.25 IE = -0.25 SE = -0.75 IEy = -0.75 SEx= +0.414 IEx = -0.414 SEy = -0.293 IEr = -0.207 Income = $3 Px= $1, Py= $2

Microeconomics A Contemporary Intro
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 2QFR
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A consumer has the following utility function: Ulx, y) = xy -y, *21 where x and y represents the quantities consumed of goods X and Y. y 20 What will be the substitution and income effects for X and Yassuming that the consumer attempts to maintain the same level of utility achieved before price of Y increased (that is, when price of Y was $1)? SEx= +0.5 IEx = -0.5 SE, = -0.25 IE- = -0.25 SEx= +0.293 IE = -0.293 SEy = -0.414 IE, = +0.414 SEr= +0.25 IE SE, = -0.75 IE, = -0.75 = -0.25 SEx= +0.414 IEx = -0.414 SEy = -0.293 IE, = -0.207 Income = $3 Px= $1, Py= $2
Transcribed Image Text:A consumer has the following utility function: Ulx, y) = xy -y, *21 where x and y represents the quantities consumed of goods X and Y. y 20 What will be the substitution and income effects for X and Yassuming that the consumer attempts to maintain the same level of utility achieved before price of Y increased (that is, when price of Y was $1)? SEx= +0.5 IEx = -0.5 SE, = -0.25 IE- = -0.25 SEx= +0.293 IE = -0.293 SEy = -0.414 IE, = +0.414 SEr= +0.25 IE SE, = -0.75 IE, = -0.75 = -0.25 SEx= +0.414 IEx = -0.414 SEy = -0.293 IE, = -0.207 Income = $3 Px= $1, Py= $2
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