Answer

Marvin has a Cobb-Douglas utility function, U =q1 0.5 0.5 his income is Y = $500, and initially he faces prices of p. = $2 and p, = $4. If p, increases from $2 to $5, what are his compensating variation (CV), change in consumer surplus (ACS), and equivalent variation (EV)? Marvin's compensating variation (CV) is $|(Enter your response rounded to two decimal places and include a minus sign if necessary.) Marvin's change in consumer surplus (ACS) is $ . (Enter your response rounded to two decimal places and include a minus sign if necessary.) Marvin's equivalent variation (EV) is $ (Enter your response rounded to two decimal places and include a minus sign if necessary.)