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

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

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

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