Bob's utility function is given by U(x,y) = x/2,1/2, His income is $100, the price of...

 

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Bob's utility function is given by U(x,y) = x¹/2,1/2, His income is $100, the price of x is $20, and the price of y is $1. If the price of x decreases to $10, how much money would have to be given to Bob to make him as well off as he was before the price decrease? What is the change in Bob's consumer surplus? Consumer Surplus above is: gained or Lost? Bob's utility function is given by U(x,y) = x¹/2,1/2, His income is $100, the price of x is $20, and the price of y is $1. If the price of x decreases to $10, how much money would have to be given to Bob to make him as well off as he was before the price decrease? What is the change in Bob's consumer surplus? Consumer Surplus above is: gained or Lost?

Answer rating: 100% (QA)

Before the price decrease Bobs budget constraint was 100 20x y Using his utility function we can fin... View the full answer