Assume an hypothetical consumer faced by the following utility function; U=X^2Y ( squared times y). After a bad harvest and thus bad economic conditions, the price of good X increases from Ksh.4.2 to Ksh. 4.8, while the price of good Y which was ksh. 4 increased to ksh.5. The income of the consumer was ksh. 30 before and after the good harvest. Calculate the CV and EV.

Assume an hypothetical consumer faced by the following utility function; U=X^2Y ( squared times y). After a bad harvest and thus bad economic conditions, the price of good X increases from Ksh.4.2 to Ksh. 4.8, while the price of good Y which was ksh. 4 increased to ksh.5. The income of the consumer was ksh. 30 before and after the good harvest. Calculate the CV and EV.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 10RQ: What is the rule relating the ratio of marginal utility to prices of two goods at the optimal...

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