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Can you help me answer this macroeconomics theory question. It's all question 7 it's parts a through c

Can you help me answer this macroeconomics theory question. It's all question 7 it's parts a through c

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Can you help me answer this macroeconomics theory question. It's all question 7 it's parts a through c
b) Suppose the price of x, increases to $2. What is the compensating variation? In other words, how much money would Robert need to be given in order to leave him just as well off after the price change as he was before the price change? c) What is Robert's equivalent variation if the price of x₁ increases to $2? In other words, how much money is Robert willing to pay to avoid the increase in price?
Transcribed Image Text:b) Suppose the price of x, increases to $2. What is the compensating variation? In other words, how much money would Robert need to be given in order to leave him just as well off after the price change as he was before the price change? c) What is Robert's equivalent variation if the price of x₁ increases to $2? In other words, how much money is Robert willing to pay to avoid the increase in price?
Questions 7 (Slutsky Equation and Consumer Surplus). Robert's utility function for x, and x₂ is: U (X1, X2) = x1 * x2 The price of x, is $1, the price of x2 is $1, and his income is $20. a) What is Robert's original optimal consumption bundle and utility? Page 5
Transcribed Image Text:Questions 7 (Slutsky Equation and Consumer Surplus). Robert's utility function for x, and x₂ is: U (X1, X2) = x1 * x2 The price of x, is $1, the price of x2 is $1, and his income is $20. a) What is Robert's original optimal consumption bundle and utility? Page 5
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