Question: what is the difference between compensated demand function and demand function x*(px,py,I) 4. Suppose Eugene has utility U - vx + y, and is facing

 what is the difference between compensated demand function and demand function

what is the difference between compensated demand function and demand function x*(px,py,I)

x*(px,py,I) 4. Suppose Eugene has utility U - vx + y, and

4. Suppose Eugene has utility U - vx + y, and is facing prices P. - 100, P, - 300. a) Solve for the compensated demand functions x(Px, Py, U) and y" (Px, Py, U). (Remember to check first for monotonicity and convexity.) b) Find the expenditure function E( Px, Py, U) and check whether it increases (and by how much) if both prices increase by 40%. If only the price of good x increases by 40%, while the price of y remains unchanged, by what percentage does expenditure increase in order to remain at the same utility level? c) It turns out that initially the consumer was spending % of the budget on good x and y on good y (you can verify this by solving the utility maximization problem). If we had assumed that the bundle consumed doesn't change, by how much would we think the consumer's income has to increase, in order to compensate them for the increase in price

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