Assume that a consumer consumes two diff erent goods, and the utility function is u(x)= u (x1, x2) = x1x2, the production function of t wo goods is y=1/2+(x-5/8)1/3 at first, then t he function of goods 1 changes to y=1/2+(x -325/8)1/3. Assume that her income is M = 1 8. Calculate the compensating variation and equivalent variation. A CV-16√3-15 EV=15-6√3 B EV-15-6√3 CV-16√3-15 C EV-18√3-18 CV-18-6√3 D EV-18-6√3 CV-18√3-18

Assume that a consumer consumes two diff erent goods, and the utility function is u(x)= u (x1, x2) = x1x2, the production function of t wo goods is y=1/2+(x-5/8)1/3 at first, then t he function of goods 1 changes to y=1/2+(x -325/8)1/3. Assume that her income is M = 1 8. Calculate the compensating variation and equivalent variation. A CV-16√3-15 EV=15-6√3 B EV-15-6√3 CV-16√3-15 C EV-18√3-18 CV-18-6√3 D EV-18-6√3 CV-18√3-18

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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