Suppose that consumer has the following utility function: U(X,Y) = XY and Py = 1, Py = 4 and I =720. Suppose now that Px goes up to 4. What is the magnitude of the substitution effect on good X?%3D%3D-90180-18090

Here in the question, we have to find out the magnitude of the substitution effect. Income = 720 Px…

Suppose that consumer has the following utility function: U(X,Y) = XY and Px = 1, Py = 4 and I = 720. Suppose now that Px goes up to 4. What is the magnitude of the substitution effect on good X? -90 180 -180

Suppose that consumer has the following utility function: U(X,Y) = XY and Px = 1, Py = 4 and I = 720. Suppose now that Px goes up to 4. What is the magnitude of the substitution effect on good X? -90 180 -180

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Suppose that consumer has the following utility function: U(X,Y) = XY and Py = 1, Py = 4 and I =
720. Suppose now that Px goes up to 4. What is the magnitude of the substitution effect on good X?
%3D
%3D
-90
180
-180
90

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6.