500359 Microeconomics Tutorial Exercises 6 (2019-20).doc - 500359 \u2013 MICROECONOMICS \u2013 2019\/20 Class Exercises Problem Set 6 1 The government is

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500359 – MICROECONOMICS – 2019/20 Class Exercises Problem Set 6 1. The government is considering introducing a scheme to help encourage students to buy textbooks. They are currently looking at two alternative systems: book vouchers worth £150 or £150 cash payment per year. Assuming books cost £20 each and that students each have an initial annual income (spending capacity) of M = £1000, state which of the systems the following student would prefer if the individual has preferences U ( X , Y ) = X 0.1 Y 0.9 . Note, X denotes books and Y is a composite good.
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  • Fall '19
  • John Wiley, Rockett, D. Braeutigam

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