Greg has the following utility function: u=x10.75x20.25. He has an income of $68.00, and he faces these prices: (p1,p2)=(8.00,4.00). Suppose that the price of x1 increases by $1.00. Calculate the equivalent variation for this price change.

Greg has the following utility function: u=x10.75x20.25. He has an income of $68.00, and he faces these prices: (p1,p2)=(8.00,4.00). Suppose that the price of x1 increases by $1.00. Calculate the equivalent variation for this price change.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 16SQ

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Greg has the following utility function: u=x₁^0.75x₂^0.25. He has an income of $68.00, and he faces these prices: (p1,p2)=(8.00,4.00). Suppose that the price of x1 increases by $1.00. Calculate the equivalent variation for this price change.

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