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Questions › JNU › JNU SIS 2015 › Q30
2 marks, −1Microeconomics › Demand theory and elasticity › Compensating and equivalent variationHardabout 3 min

JNU SIS 2015 Question 30: Demand theory and elasticity

Anand consumes two goods, XXX and YYY. His utility function is U=X2YU = X^2 YU=X2Y. The price of XXX is 1 and the price of YYY is 2, while Anand's income is 100. Now, let the price of YYY fall to 1, while the price of XXX and income stay constant.

In question no. 28 above, the Slutsky equivalent variation is

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Anand consumes two goods, X and Y. His utility function is U = X² Y. The price of X is 1 and the price of Y is 2, while Anand's income is 100. Now, let the price of Y fall to 1, while the price of X and income stay constant. In question no. 28 above, the Slutsky equivalent variation is (A) -50/3 (B) 100/3 (C) 0 (D) -100/3

Also written as: Anand consumes two goods, X and Y. His utility function is U = X^2 Y. The price of X is 1 and the price of Y is 2, while Anand's income is 100. Now, let the price of Y fall to 1, while the price of X and income stay constant. In question no. 28 above, the Slutsky equivalent variation is

Demand theory and elasticity has come up 161 times in 7 exams since 2004.

What this question tests

This question is on Compensating and equivalent variation, part of Demand theory and elasticity in Microeconomics.

Money measures of the welfare change from a price change.

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