Question

Consideru(x_{1},x_{2})=2x_{1}^{0.5}+x_{2},I=200,p_{1}=1,p_{2}=4. If p_{2} increases from $4 to $8, what is the compensating variation? Enter a number only, round to two decimals. If money needs to be taken away from the consumer include a negative sign.

Now consider what is the equivalent variation? Enter a number only, round to two decimals. If money needs to be taken away from the consumer include a negative sign.

8.6 Homework • Unanswered 5 Consideru(x1, x2) = 2x0.5 + x2,1 = 200,p1 = 1,P2 = 4. If P2 increases from $4 to $8, what is the

Consider u(x1, x2) = 2x0.5 + x2,I = 200,p1 = 1,P2 = 4. If Paincreases from $4 to $8, what is the equivalent variation? Enter

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Answer #1

Venac 2205+ -= 200 PI , P244 P² = $8. original Budget line: pisut path = I G+ 4% - 200 MRS = more Moxy = 2x + 2 5 dar) MRS2 BEve Change in Income required to keep the consumer @ new citility but original prices New Budget live: x+ 8x4=200. New Eqsim

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