Consider a market with two goods: good 1 and good 2. Suppose that the price of...

 

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Consider a market with two goods: good 1 and good 2. Suppose that the price of good 1 is $1 and the price of good 2 is $5. Consider a consumer with $118. Assume that the consumer has the following utility function: U(x₁,x₂) = min {x₁/5, x2/3} Assume that the price of good 1 increases to $8 and the price of good 2 increases to $9. First, obtain the indirect utility function as a function of income and prices. Then, calculate the optimal bundle the new prices $8 and $9. (Leave things in fractions - do not round). By using the final bundle, calculate the final utility level. (Leave things in fractions - do not round). Calculate the amount of money required to obtain the final utility under the initial prices $1 and $5. (Leave things in fractions - do not round). Finally, calculate the equivalent variation. Consider a market with two goods: good 1 and good 2. Suppose that the price of good 1 is $1 and the price of good 2 is $5. Consider a consumer with $118. Assume that the consumer has the following utility function: U(x₁,x₂) = min {x₁/5, x2/3} Assume that the price of good 1 increases to $8 and the price of good 2 increases to $9. First, obtain the indirect utility function as a function of income and prices. Then, calculate the optimal bundle the new prices $8 and $9. (Leave things in fractions - do not round). By using the final bundle, calculate the final utility level. (Leave things in fractions - do not round). Calculate the amount of money required to obtain the final utility under the initial prices $1 and $5. (Leave things in fractions - do not round). Finally, calculate the equivalent variation.