Question: Please answer these two questions:) Sara has a demand function for cake q = 0.02m - 2p, where m is income and p is price.
Please answer these two questions:)


Sara has a demand function for cake q = 0.02m - 2p, where m is income and p is price. Sara's income is $6,500 and she initially had to pay a price of $50 per box of cake. The price of cake rose to $60. The substitution effect of the price change Select one: O a. reduced her demand by 14. O b. reduced her demand by 20. O c. increased her demand by 20. O d. reduced her demand by 26.If Sandra (whose utility function is min(x, y), where x is her consumption of cupcake and y is money left for other stuff) had an income of $12 and was paying a price of $4 for a cupcake, then if the price of cupcake went up to $6, the equivalent variation of the price change would be Select one: O a. $4.80. O b. $9.60. O c. $1.71. O d. $3.43
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