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 muchmoney would Robert need to be given in order to leave him just as well off after the price change as hewas before the price change?c) What is Robert's equivalent variation if the price of x₁ increases to $2? In other words, how muchmoney 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 * x2The 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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Can you help me answer this macroeconomics theory question. It's all question 7 it's parts a through c

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Chapter1: Making Economics Decisions

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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?

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

Branch of economics that analyzes the behavior and performance of an economy as a whole. It focuses on the study of aggregates and evaluates changes related to unemployment, gross domestic product, inflation, monetary and fiscal policies of the government.

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