Treen's utility function is U (x,y) = min (x, 2p).He has $150 and the price of...

   

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Treen's utility function is U (x,y) = min (x, 2p).He has $150 and the price of x and the price of y are both $1. His boss is thinking of sending him to another townwhere the price of x is $1 and the price of y is $2. The boss offers no raise in pay. Treen understands compensating and equivalent variation perfectly, complains bitterly. He says that although he doesn't mind moving for its own sake and the newtown is just as pleasant as the old, having to move is as bad as a cut in pay of $A. Healso says he wouldn't mind moving if when he moved, he got a raise of SB. Calculatethe value of A and B and explain. Treen's utility function is U (x,y) = min (x, 2p).He has $150 and the price of x and the price of y are both $1. His boss is thinking of sending him to another townwhere the price of x is $1 and the price of y is $2. The boss offers no raise in pay. Treen understands compensating and equivalent variation perfectly, complains bitterly. He says that although he doesn't mind moving for its own sake and the newtown is just as pleasant as the old, having to move is as bad as a cut in pay of $A. Healso says he wouldn't mind moving if when he moved, he got a raise of SB. Calculatethe value of A and B and explain.

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Original town Price of x and y is 1 each Treen has 150 to spend His utility function is Uxy minx 2p ... View the full answer