Suppose Cody has utility function U (x, y) = a/¤ + ß/ỹ over goods x and y, where a 2 and B = 2. a) If prices are Px=7 and Py=4 and income is 2000, how many units of good x will Cody purchase? Enter this number in the space below (You can round to the nearest integer if needed.) b) Suppose that the price of x doubles, but Cody receives compensation so that he remains exactly as well off as before. How many units will he buy in this scenario? Show your derivation clearly.

Suppose Cody has utility function U (x, y) = a/¤ + ß/ỹ over goods x and y, where a 2 and B = 2. a) If prices are Px=7 and Py=4 and income is 2000, how many units of good x will Cody purchase? Enter this number in the space below (You can round to the nearest integer if needed.) b) Suppose that the price of x doubles, but Cody receives compensation so that he remains exactly as well off as before. How many units will he buy in this scenario? Show your derivation clearly.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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