Question: Bob's utility function isu(x1, x2) = 3x1+x2, and he has incomem= 10. The price of good 2 isp2= 1. Letp1denote the initial price of good

  1. Bob's utility function isu(x1, x2) = 3x1+x2, and he has incomem= 10. The price of good 2 isp2= 1. Letp1denote the initial price of good 1, and letp1denote a new lower price of good 1, sop1< p1.
  2. (a) For what values (if any) ofp1andp1is the substitution effect on good 1 equal to zero?
  3. (b) For what values (if any) ofp1andp1is the income effect on good 1 equal to zero?

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