Question: Suppose that an individual has the utility function U = E0.25 + Y0.75 where E is some index of environmental quality and Y is income.

Suppose that an individual has the utility function U = E0.25 + Y0.75 where E is some index of environmental quality and Y is income. From an initial situation where E = 1 and Y = 100, calculate CS and ES for an increase in E to the level 2, and for a decrease in E to the level 0.5.

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