Sasha's utility from vacations (v) and meals (m) is given by the function U=v2m. Last year, the price vacations was $200 and the price of meals was $50. This year, the price of meals rose to $75; the pr of vacations remain unchanged. In both years, Sasha's income was $1500. (Note: I'd suggest solv this problem differently than you solved problem 1. It would be good practice.) (2) Calculate the change in
Sasha's utility from vacations (v) and meals (m) is given by the function U=v2m. Last year, the price vacations was $200 and the price of meals was $50. This year, the price of meals rose to $75; the pr of vacations remain unchanged. In both years, Sasha's income was $1500. (Note: I'd suggest solv this problem differently than you solved problem 1. It would be good practice.) (2) Calculate the change in
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 6QFR
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Transcribed Image Text:2. Sasha's utility from vacations (v) and meals (m) is given by the function U = v²m. Last year, the price of
vacations was $200 and the price of meals was $50. This year, the price of meals rose to $75; the price
of vacations remain unchanged. In both years, Sasha's income was $1500. (Note: I'd suggest solving
this problem differently than you solved problem 1. It would be good practice.)
(a) Calculate the change in consumer surplus for the price change in meals.
(b) Calculate the compensating variation for the price change in meals.
(c) Calculate the equivalent variation for the price change in meals.
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