Please help me to solve questions (a) (b) (e). (especially question e). thank you! 1. Mary has a utility function u(x, y) = 2lnx + 4y. In the initial situation:p: = 2, p9 = 4, Mº = 100. In the new situation: p = 3, p} = 3, M² = 90.(a) Calculate the utility level u° for the initial situation.(b) Calculate the expenditure minimizing amount to obtain utility uº at the newprices.(c) Use your findings from (a) and (b) to calculate the CV from the change.(d) Consider the alternative situation, where p = 3, p} = 4, M² = 100. Calculate theCV from the change.(e) Based on what you know about the utility function, do you expect the CV in part(d) to be smaller, larger, or equal to the change in CS computed using the demandcurve for good x?

As asked to solve parts A, B, and E.

1. Mary has a utility function u(x, y) = 2lnx + 4y. In the initial situation: pg = 2, pg = 4, Mº = 100. In the new situation: p = 3, p3 = 3, M² = 90. (a) Calculate the utility level u° for the initial situation. (b) Calculate the expenditure minimizing amount to obtain utility u° at the new prices.

1. Mary has a utility function u(x, y) = 2lnx + 4y. In the initial situation: pg = 2, pg = 4, Mº = 100. In the new situation: p = 3, p3 = 3, M² = 90. (a) Calculate the utility level u° for the initial situation. (b) Calculate the expenditure minimizing amount to obtain utility u° at the new prices.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 3SQP

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