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In: Economics

Marvin has a​ Cobb-Douglas utility​ function, U=q10.5q20.5 his income is Y=​$900​, and initially he faces prices...

Marvin has a​ Cobb-Douglas utility​ function, U=q10.5q20.5 his income is Y=​$900​, and initially he faces prices of p1=​$44 and p2=​$2. If p1 increases from $4 to $5​, what are his compensating variation​ (CV), change in consumer surplus (Δ​CS), and equivalent variation​ (EV)?

​Marvin's compensating variation​ (CV) is

​$nothing.

​(Enter your response rounded to two decimal places and include a minus sign if​ necessary.)

​Marvin's change in consumer surplus

​(Upper DeltaΔ​CS)

is

​$nothing.

​(Enter your response rounded to two decimal places and include a minus sign if​ necessary.)

​Marvin's equivalent variation​ (EV) is

​$nothing.

​(Enter your response rounded to two decimal places and include a minus sign if​ necessary.)

Solutions

Expert Solution

Rahul Sunny answered 1 year ago
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