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Let U(x,y) = with MUx = and MUy

Question 51

Multiple Choice

Let U(x,y) = Let U(x,y) = with MU<sub>x</sub> = and MU<sub>y</sub> = .Let I = $100,P<sub>x</sub> = $10 and P<sub>y</sub> = $10 be the initial set of prices and income.Now,let P<sub>x</sub> rise to $25.What are the (approximate) substitution and income effects of this change in prices? A) Income effect = -3.3; Substitution Effect = -2.1 B) Income effect = -2.3; Substitution Effect = -1.7 C) Income effect = -1.3; Substitution Effect = -1.7 D) Income effect = -1.7; Substitution Effect = -1.3 with MUx = Let U(x,y) = with MU<sub>x</sub> = and MU<sub>y</sub> = .Let I = $100,P<sub>x</sub> = $10 and P<sub>y</sub> = $10 be the initial set of prices and income.Now,let P<sub>x</sub> rise to $25.What are the (approximate) substitution and income effects of this change in prices? A) Income effect = -3.3; Substitution Effect = -2.1 B) Income effect = -2.3; Substitution Effect = -1.7 C) Income effect = -1.3; Substitution Effect = -1.7 D) Income effect = -1.7; Substitution Effect = -1.3 and MUy = Let U(x,y) = with MU<sub>x</sub> = and MU<sub>y</sub> = .Let I = $100,P<sub>x</sub> = $10 and P<sub>y</sub> = $10 be the initial set of prices and income.Now,let P<sub>x</sub> rise to $25.What are the (approximate) substitution and income effects of this change in prices? A) Income effect = -3.3; Substitution Effect = -2.1 B) Income effect = -2.3; Substitution Effect = -1.7 C) Income effect = -1.3; Substitution Effect = -1.7 D) Income effect = -1.7; Substitution Effect = -1.3 .Let I = $100,Px = $10 and Py = $10 be the initial set of prices and income.Now,let Px rise to $25.What are the (approximate) substitution and income effects of this change in prices?


A) Income effect = -3.3; Substitution Effect = -2.1
B) Income effect = -2.3; Substitution Effect = -1.7
C) Income effect = -1.3; Substitution Effect = -1.7
D) Income effect = -1.7; Substitution Effect = -1.3

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