Given: U = U(X,Y) = X0.2Y0.8 %3D | = (Px)(X) + (Py)(Y) | = 100 Рx0 %3D 2 Px1 = 4 Py = 2 %3D Find compensating variation (CV) when price of Good X increases from 2 to 4: 1) 11.50 2) 12.95 3) 13.86 4) 14.92
Given: U = U(X,Y) = X0.2Y0.8 %3D | = (Px)(X) + (Py)(Y) | = 100 Рx0 %3D 2 Px1 = 4 Py = 2 %3D Find compensating variation (CV) when price of Good X increases from 2 to 4: 1) 11.50 2) 12.95 3) 13.86 4) 14.92
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![Given:
U = U(X,Y) = X0.2Y0.8
%3D
| = (Px)(X) + (Py)(Y)
%3D
| = 100
Рх0 %3D 2
Px1 = 4
Py = 2
%3D
Find compensating variation (CV) when
price of Good X increases from 2 to 4:
1)
11.50
2)
12.95
3)
13.86
4)
14.92](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbc52739f-632f-461b-bc24-b4b393764733%2F9cf8b90d-c372-45ea-9fe5-9b6a8061edc8%2Fzeb49d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Given:
U = U(X,Y) = X0.2Y0.8
%3D
| = (Px)(X) + (Py)(Y)
%3D
| = 100
Рх0 %3D 2
Px1 = 4
Py = 2
%3D
Find compensating variation (CV) when
price of Good X increases from 2 to 4:
1)
11.50
2)
12.95
3)
13.86
4)
14.92
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