Determine the total price effect , Business Economics

An agent has a utility function over goods 1 and 2 of the form U = xc1 x d2 where c is your 1- digit number and d is your minimum number. The agent's income is equal to your 2-digit number. Initially, the price of good 1 is your median number and the price of good 2 is your individual number. Let the price of good 1 change to your maximum number. For good 1, determine for this price change the

a) Total price effect

b) The substitution effect

c) The income effect

 

Posted Date: 3/30/2013 3:33:54 AM | Location : United States







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