Charlie’s utility function is u= xy. Initially, the price of x was $1, the price of y was $2, and his income was $80. Now the price of x rises to $2, ceteris paribus. Charlie’s (Slutsky) substitution effect is to reduce his consumption of good x by __________. No diagram required

Charlie’s utility function is u= xy. Initially, the price of x was $1, the price of y was $2, and his income was $80. Now the price of x rises to $2, ceteris paribus. Charlie’s (Slutsky) substitution effect is to reduce his consumption of good x by __________. No diagram required

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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