Juliana gets the following 15 units for free if she buys 30 units of good Y (at RM2 per unit). This promotion is only valid for the first 30 pieces she purchases. Calculate Julia's total utility received. Derive Juliana's new budget line equation. Sketch the budget line before and after the change in the price of good Y using an appropriate diagram.

Juliana gets the following 15 units for free if she buys 30 units of good Y (at RM2 per unit). This promotion is only valid for the first 30 pieces she purchases. Calculate Julia's total utility received. Derive Juliana's new budget line equation. Sketch the budget line before and after the change in the price of good Y using an appropriate diagram.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter21: Demand: Consumer Choic

Section: Chapter Questions

Problem 1E

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Eren’s two main hobbies are taking vacations overseas (V) and eating expensivemeals (M). His utility function is given as: U(V,M) = V2MLast year, the average price of taking a vacation overseas was US$200 and the averageprice of an expensive meal is $50. However, due to supply problems in Onions, theaverage price of an expensive meal rose to $75. The average price of a vacation did notchange. His income, which is $1500, did not change. Calculate for the equivalent variation (EV) for the price change.
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