Sam's is interested in two goods, X and Y. His indirect utility function is   U* = M px-0.9 py0.9-1.    ( same as U* = M /(px0.9 py1-0.9 ) ) where M is Sam's income, and px   and py denote respectively the price of good X and the price of good Y. Sam's market demand function for good X is X*=0.9M/px . Assuming his income is M=564 and price of good Y is equal to 4, find the absolute value of the change in Sam's consumers surplus if the price of good X rises from 1 to 9 dollars and enter this value below.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter5: Income And Substitution Effects
Section: Chapter Questions
Problem 5.5P
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Sam's is interested in two goods, X and Y. His indirect utility function is

 

U* = M px-0.9 py0.9-1.    ( same as U* = M /(px0.9 py1-0.9 ) )

where M is Sam's income, and px   and py denote respectively the price of good X and the price of good Y.

Sam's market demand function for good X is X*=0.9M/px .

Assuming his income is M=564 and price of good Y is equal to 4, find the absolute value of the change in Sam's consumers surplus if the price of good X rises from 1 to 9 dollars and enter this value below.  

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