2nd attempt Greg has the following utility function: u = x0.55x0.45. He has an income of $96.00, and he faces these prices: (P1, P2) = (10.00, 8.00). Suppose that the price of x₁ increases by $1.00. Calculate the compensating variation for this price change. Give your answer to two decimals. $

2nd attempt Greg has the following utility function: u = x0.55x0.45. He has an income of $96.00, and he faces these prices: (P1, P2) = (10.00, 8.00). Suppose that the price of x₁ increases by $1.00. Calculate the compensating variation for this price change. Give your answer to two decimals. $

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 6P

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Question

2nd attempt
Greg has the following utility function: u = x0.55x0.45. He has an income of $96.00, and he faces these prices:
(P1, P2) (10.00, 8.00). Suppose that the price of x₁ increases by $1.00. Calculate the compensating variation for this price change.
Give your answer to two decimals.
$
=

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