Marvin has a Cobb-Douglas utility function,0.5 0.5U= 91 92his income is Y = $900, and initially he faces prices of p₁ = $1 and p2 = $4. If p₁ increases from $1 to $2, what are hiscompensating variation (CV), change in consumer surplus (ACS), and equivalent variation (EV)?Marvin's change in consumer surplus (ACS) is $minus sign if necessary.)Marvin's compensating variation (CV) is $. (Enter your response rounded to two decimal places and include a minussign if necessary.)(Enter your response rounded to two decimal places and include aMarvin's equivalent variation (EV) is $. (Enter your response rounded to two decimal places and include a minus signif necessary.)

Marvin has a Cobb-Douglas utility function, U=91 0.5 0.5 his income is Y = $900, and initially he faces prices of p₁ = $1 and p₂ = $4. If p₁ increases from $1 to $2, 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 minu

Marvin has a Cobb-Douglas utility function, U=91 0.5 0.5 his income is Y = $900, and initially he faces prices of p₁ = $1 and p₂ = $4. If p₁ increases from $1 to $2, 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 minu

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Concept explainers

Product and Price Bundling

Product and price bundling is used as a marketing strategy by businesses, where complementary products and services are combined and sold as a package deal. This bundled price is usually less than the total price of the individual products if they were to be sold separately. When bundled and sold, each product is sold at a reduced price. Using a price bundling strategy helps increase the average revenue per user and also increases the engagement with the user. This happens as the perceived value of the bundled products is more than the individual products.

Question

Marvin has a Cobb-Douglas utility function,
0.5 0.5
U= 91 92
his income is Y = $900, and initially he faces prices of p₁ = $1 and p2 = $4. If p₁ increases from $1 to $2, what are his
compensating variation (CV), change in consumer surplus (ACS), and equivalent variation (EV)?
Marvin's change in consumer surplus (ACS) is $
minus sign if necessary.)
Marvin's compensating variation (CV) is $. (Enter your response rounded to two decimal places and include a minus
sign if necessary.)
(Enter your response rounded to two decimal places and include a
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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Step 3: Calculate CV

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Step 4: Calculate EV

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Step 5: Calculate change demand function

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Step 6: Calculate change in CS

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