x, y) = 2√x + y. Let price of X be $0.50, price of Y be $1 and income is $10. (i) Find initial equilibrium of the consumer. (ii) Find the new equilibrium if price of X falls to $0.20. (iii) Using Hicksian technique decompose the price effect into substitution and income effects
x, y) = 2√x + y. Let price of X be $0.50, price of Y be $1 and income is $10. (i) Find initial equilibrium of the consumer. (ii) Find the new equilibrium if price of X falls to $0.20. (iii) Using Hicksian technique decompose the price effect into substitution and income effects
Chapter6: Demand Relationships Among Goods
Section: Chapter Questions
Problem 6.9P
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x, y) = 2√x + y. Let price of X be $0.50, price of Y be $1 and income is $10.
(i) Find initial equilibrium of the consumer.
(ii) Find the new equilibrium if price of X falls to $0.20.
(iii) Using Hicksian technique decompose the price effect into substitution and
income effects
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