(g) Show that, if M falls to $1034, with Px = 8 and Py = 5, then this has the same utility as the equilibrium in (e) above. Eg confirm that utility is unchanged but with this new income and prices. (h) What do we mean by Compensating Variation (CV)? What is the value of the CV in this example? Explain.<
(g) Show that, if M falls to $1034, with Px = 8 and Py = 5, then this has the same utility as the equilibrium in (e) above. Eg confirm that utility is unchanged but with this new income and prices. (h) What do we mean by Compensating Variation (CV)? What is the value of the CV in this example? Explain.<
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.14P
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solve g, h please
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