3. A consumer's utility function is u(x, y) = x/y2/3, their income is I = $150,...

Transcribed Image Text:

3. A consumer's utility function is u(x, y) = x¹/³y2/3, their income is I = $150, and the price of good y is py = $1. The price of good x decreases from px = $3 to px' = $1. Find the optimum consumption of x and y for before and after the price change and show this in a well-labeled diagram. Find the total effect, the substitution effect and income effect and show these in your diagram. 3. A consumer's utility function is u(x, y) = x¹/³y2/3, their income is I = $150, and the price of good y is py = $1. The price of good x decreases from px = $3 to px' = $1. Find the optimum consumption of x and y for before and after the price change and show this in a well-labeled diagram. Find the total effect, the substitution effect and income effect and show these in your diagram.