Greg has the following utility function:u=x63x937. He has an income of $66.00, and he faces these prices: (P₁-P2) (10.00, 5.00). Suppose that the price of xy increases by $1.00. Calculate the compensating variation for this price change. Give your answer to two decimals.

Greg has the following utility function:u=x63x937. He has an income of $66.00, and he faces these prices: (P₁-P2) (10.00, 5.00). Suppose that the price of xy increases by $1.00. Calculate the compensating variation for this price change. Give your answer to two decimals.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter20: Consumer Choice: Maximizing Utility And Behavioral Economics

Section20.1: Utility Theory

Problem 2ST

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Greg has the following utility function: u = x063x937. He has an income of $66.00, and he faces these prices:
(P₁-P2) = (10.00, 5.00). Suppose that the price of xy increases by $1.00. Calculate the compensating variation for this price change.
Give your answer to two decimals.

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