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Marvin has a Cobb-Douglas utility function, 0.5 0.5 U=9₁ 92 his income is Y = $700, and initially he faces prices of p₁ = $2 and p₂ = $2. If P₁ increases from $2 to $4, what are his compensating variation (CV), change in consumer surplus (ACS), and equivalent variation (EV)? Marvin's compensating variation (CV) is $ (Enter your response rounded

Marvin has a Cobb-Douglas utility function, 0.5 0.5 U=9₁ 92 his income is Y = $700, and initially he faces prices of p₁ = $2 and p₂ = $2. If P₁ increases from $2 to $4, what are his compensating variation (CV), change in consumer surplus (ACS), and equivalent variation (EV)? Marvin's compensating variation (CV) is $ (Enter your response rounded

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter6: Demand Relationships Among Goods
Section: Chapter Questions
Problem 6.9P
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Marvin has a Cobb-Douglas utility function, 0.5 0.5 U=91 92 his income is Y = $700, and initially he faces prices of p₁ = $2 and p₂ = $2. If P₁ increases from $2 to $4, what are his compensating variation (CV), change in consumer surplus (ACS), and equivalent variation (EV)? Marvin's compensating variation (CV) is $ (Enter your response rounded to two decimal places and include a minus sign if necessary.) Marvin's change in consumer surplus (ACS) is $ (Enter your response rounded to two decimal places and include a minus sign if necessary.) Marvin's equivalent variation (EV) is $ (Enter your response rounded to two decimal places and include a minus sign if necessary.)
Transcribed Image Text:Marvin has a Cobb-Douglas utility function, 0.5 0.5 U=91 92 his income is Y = $700, and initially he faces prices of p₁ = $2 and p₂ = $2. If P₁ increases from $2 to $4, what are his compensating variation (CV), change in consumer surplus (ACS), and equivalent variation (EV)? Marvin's compensating variation (CV) is $ (Enter your response rounded to two decimal places and include a minus sign if necessary.) Marvin's change in consumer surplus (ACS) is $ (Enter your response rounded to two decimal places and include a minus sign if necessary.) Marvin's equivalent variation (EV) is $ (Enter your response rounded to two decimal places and include a minus sign if necessary.)
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