4. A consumer has preferences such that their Hicksian demands for r and y are given by r = and y, = 4. Initially, the price of r and y are both equal to 6 and at these prices the consumer achieves a maximum utility of 10. If the price of r doubles to 12, how much would the government have to pay this consumer in order for them to be able to achieve the same utility as before the price change? Justify your answer.

4. A consumer has preferences such that their Hicksian demands for r and y are given by r = and y, = 4. Initially, the price of r and y are both equal to 6 and at these prices the consumer achieves a maximum utility of 10. If the price of r doubles to 12, how much would the government have to pay this consumer in order for them to be able to achieve the same utility as before the price change? Justify your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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