Assume that U = (x + 2)(y + 1), with (x + 2) (y + 1),...

  

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Assume that U = (x + 2)(y + 1), with (x + 2) (y + 1), respectintly with y and income, respicutively. Px, PX, Py and M being prices per unit of good good Derive the effect of change in Px on equilibrium x. Decompose it into substitution effect and income effect. Assume that U = (x + 2)(y + 1), with (x + 2) (y + 1), respectintly with y and income, respicutively. Px, PX, Py and M being prices per unit of good good Derive the effect of change in Px on equilibrium x. Decompose it into substitution effect and income effect.

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Given U x 2y 1 Px Py M are prices of good x good y and income respectively 1 Take part... View the full answer