consume two goods, good x and good y. These goods sell at prices px…

(b) You consume two goods, good x and good y. These goods sell
at prices px = 1 and py = 1, respectively. Your preferences are
represented by the following utility function: U(x; y) = x ln(y):
You have an income of m = 100. How many units of x and y will you
buy and what will is your utility? If px increases from $1 to $2;
figure out the compensating variation (CV) associated with price
change. spnova-new-dynamic-txt
(c) If instead your utility is U(x; y) = ln(x) y; figure out
the compensating variation (CV) as px increases from $1 to $2: spnova-new-dynamic-txt
(d) Are the compensating variations the same for both of the
above utility functions? Explain your answer rigorously. spnova-new-dynamic-txt

 

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