An individual allocates $306 each month to buying two goods, X and Y, in such a way that maximizes their utility U (X,Y) = 2X Yi. Good X costs $4.25 and Good Y costs $17. If MUX and MUY , calculate the substitution and income effect for Good X when the price of Good X falls to $3.40. Do not round your intermediate calculations, but you can round your final answers for units of X and Y to two decimal places.

Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
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An individual allocates $306 each month to buying two goods, X and Y, in such a way that maximizes their utility
U (X,Y) = 2X Y i. Good X costs $4.25 and Good Y costs $17.
If MUx = Y
and MUy = X2, calculate the substitution and income effect for Good X when the price of Good
%3D
Y
X falls to $3.40.
Do not round your intermediate calculations, but you can round your final answers for units of X and Y to two
decimal places.
Transcribed Image Text:An individual allocates $306 each month to buying two goods, X and Y, in such a way that maximizes their utility U (X,Y) = 2X Y i. Good X costs $4.25 and Good Y costs $17. If MUx = Y and MUy = X2, calculate the substitution and income effect for Good X when the price of Good %3D Y X falls to $3.40. Do not round your intermediate calculations, but you can round your final answers for units of X and Y to two decimal places.
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