Principles of Economics
Principles of Economics
7th Edition
ISBN: 9781305156043
Author: N. Gregory Mankiw
Publisher: Cengage Learning US
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Chapter 35, Problem 2PA

Sub part (a):

To determine

Changes in short run and long run Phillips curve.

Sub part (b):

To determine

Changes in short run and long run Phillips curve.

Sub part (c):

To determine

Changes in short run and long run Phillips curve.

Sub part (d):

To determine

Changes in short run and long run Phillips curve.

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The preferences of a consumer are represented by the following utility function: U = min (×1, 2x2) If income is 100 and p1=p2=1 a) What is the optimal bundle? b) If p₁=4, what is the new optimal bundle? c) If p2=4, what is the new optimal bundle? d) Decompose the price effect into income and substitution effect and provide a graphical representation of your results.
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