loui's preferences over pizza (x) and other goods (y) are given by U(X,Y)=XY^2, with associated marginal utilities. his income is $240. question d @) calculate his optimal basket when Px=8 and Py=1.   b) calculate his income and substitution effects of a decrease in the price of food to $6. c) calculate the compensating variation of the price change.  d)calculate the equivalent variation of the price change.

Question

loui's preferences over pizza (x) and other goods (y) are given by U(X,Y)=XY^2, with associated marginal utilities. his income is $240.

question d

@) calculate his optimal basket when Px=8 and Py=1.

 

  1. b) calculate his income and substitution effects of a decrease in the price of food to $6.
  2. c) calculate the compensating variation of the price change. 
  3. d)calculate the equivalent variation of the price change. 

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