What is the appropriate compensating variation

Reference no: EM13202170

Suppose Jeff's friend Bharat gains utility from restaurant meals (M) and theater productions (T) according to the function

$U(M,T)=40M^2T^\frac{1}{2}$

The constant per unit price of M is $30; the constant per unit price of T is $20; and Bharat has $300 to spend on these activities. If the price of M rises to $35, what is the appropriate compensating variation?

Reference no: EM13202170

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