1. Consider a consumer with the utility function u(x, y) = 2x¹/2 + y, an income of I = Rs100, and price of good y is Rs 1. A) Find the demand functions for goods x and y. B) If, ceteris paribus, price of good x decreases from Rs 4 to Rs 3, what is the compensating variation?

1. Consider a consumer with the utility function u(x, y) = 2x¹/2 + y, an income of I = Rs100, and price of good y is Rs 1. A) Find the demand functions for goods x and y. B) If, ceteris paribus, price of good x decreases from Rs 4 to Rs 3, what is the compensating variation?

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1/2
Consider a consumer with the utility function u(x, y) = 2x¹2 + y, an income of I = Rs 100, and
price of good y is Rs 1.
A) Find the demand functions for goods x and y.
B)
If, ceteris paribus, price of good x decreases from Rs 4 to Rs 3, what is the compensating
variation?
1.

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