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Inıtially a consumer is with the following utility functions, income, and price levels as defined below: U(q1,q2) = q10.8q20.2 s.to Y=P1 q1 + P2 q2 Y= 57 P1 = 5 P2 = 5 After a while, P1 increases to 7 (increases by 2). A-) Find substitution effect (write the value into the corresponding cell in the open excel file) B-) Find income effect (write the value into the corresponding cell in the open excel file

Inıtially a consumer is with the following utility functions, income, and price levels as defined below: U(q1,q2) = q10.8q20.2 s.to Y=P1 q1 + P2 q2 Y= 57 P1 = 5 P2 = 5 After a while, P1 increases to 7 (increases by 2). A-) Find substitution effect (write the value into the corresponding cell in the open excel file) B-) Find income effect (write the value into the corresponding cell in the open excel file

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Inıtially a consumer is with the following utility functions, income, and price levels as defined below:

 

U(q1,q2) = q10.8q20.2                 s.to      Y=P1 q1 + P2 q2

Y= 57

P1 = 5

P2 = 5

After a while, P1 increases to 7 (increases by 2).

A-) Find substitution effect (write the value into the corresponding cell in the open excel file)

B-) Find income effect (write the value into the corresponding cell in the open excel file

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