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x1 The consumer's utility function is the following: U=xx 1 2 The consumer's optimal values of x and x2 are the given by the following: x1= I x 2 2P 2P 2 1 1 I 1/2 The compensated demand equations for x, is the following: x = lc 1 2 2PP Assume the prices are the following: P-12, P2-10, and /-1000. The price of x, changes to P1-15 1 1 What is the substitution effect?

x1 The consumer's utility function is the following: U=xx 1 2 The consumer's optimal values of x and x2 are the given by the following: x1= I x 2 2P 2P 2 1 1 I 1/2 The compensated demand equations for x, is the following: x = lc 1 2 2PP Assume the prices are the following: P-12, P2-10, and /-1000. The price of x, changes to P1-15 1 1 What is the substitution effect?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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x1 The consumer's utility function is the following: U=xx 1 2 The consumer's optimal values of x and x2 are the given by the following: x1= I x 2 2P 2P 2 1 1 I 1/2 The compensated demand equations for x, is the following: x = lc 1 2 2PP Assume the prices are the following: P-12, P2-10, and /-1000. The price of x, changes to P1-15 1 1 What is the substitution effect?
Transcribed Image Text:x1 The consumer's utility function is the following: U=xx 1 2 The consumer's optimal values of x and x2 are the given by the following: x1= I x 2 2P 2P 2 1 1 I 1/2 The compensated demand equations for x, is the following: x = lc 1 2 2PP Assume the prices are the following: P-12, P2-10, and /-1000. The price of x, changes to P1-15 1 1 What is the substitution effect?
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