Suppose there are two goods, x₁ and x2, with unit prices p₁ and p2. Consider a consumer with wealth w > 0 and utility function given by (xx) = x+x Suppose that price of good 1 increases from $2 to $3 per unit. Find the compensating variation and equivalent variation of this price change.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Show the work please... Take the price of product 1 as p1 and product 2 as p2.

Suppose there are two goods, x, and x2, with unit prices p, and p2. Consider a consumer with
wealth w > 0 and utility function given by
u(x1,x2) = x² + x
Suppose that price of good 1 increases from $2 to $3 per unit. Find the compensating
variation and eauivalent variation of this price change.
Transcribed Image Text:Suppose there are two goods, x, and x2, with unit prices p, and p2. Consider a consumer with wealth w > 0 and utility function given by u(x1,x2) = x² + x Suppose that price of good 1 increases from $2 to $3 per unit. Find the compensating variation and eauivalent variation of this price change.
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