Suppose the consumer's utility function is given by U(x,y) = x3/5y2/5, and the exogenous variables are given by M = 500, Px = 5, and Py = 4. Price of y changes to Py = 2. What is the income effect on y? A.-14.53 OB. +14.53 C. +24.21 D. +25.79
Suppose the consumer's utility function is given by U(x,y) = x3/5y2/5, and the exogenous variables are given by M = 500, Px = 5, and Py = 4. Price of y changes to Py = 2. What is the income effect on y? A.-14.53 OB. +14.53 C. +24.21 D. +25.79
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.12P
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![Suppose the consumer's utility function is given by U(x,y) = x3/5y2/5, and the exogenous variables are given by M = 500, Px = 5, and Py = 4. Price of y changes to Py = 2. What is the income effect on y?
A.-14.53
OB. +14.53
O C. +24.21
OD.
+25.79
O E. None of the above](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff7f9471c-2103-462c-85a4-384faef7b979%2F587808db-571e-4d8e-aaca-3282297acfa1%2F1m8t85_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose the consumer's utility function is given by U(x,y) = x3/5y2/5, and the exogenous variables are given by M = 500, Px = 5, and Py = 4. Price of y changes to Py = 2. What is the income effect on y?
A.-14.53
OB. +14.53
O C. +24.21
OD.
+25.79
O E. None of the above
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