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Business, 11.03.2020 22:14 caspab7

Consider a consumer who consumes two goods and has utility function u(x1, x2) = x2 + √ x1. The price of good 2 is 1, the price of good 1 is p, and income is m. Start with m = 10 and p = 1.5, and suppose that the price of good 1 increases by 25%. Compute the substitution and the income effect.

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Consider a consumer who consumes two goods and has utility function u(x1, x2) = x2 + √ x1. The price...
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