Consider an individual making choices over two goods, x and y with initial prices P_{x}= 5 and P_{y}= 2, with income I=100:

- If the individual's preferences can be represented by the utility function u = 4x+ 2y; find the income, substitution and total effects of a decrease in the price of x to P
_{x}= 3. - If the individual's preferences can be represented by the utility function u = min(4x,2y); find the income, substitution and total effects of a decrease in the price of x to P
_{x}=3.

### Recently Asked Questions

- The economic profit earned by Talk Takkies is :

- What is the primary difference between the substitution and the income effect of a price change ?

- You leap from a bridge with a bungee cord tied around your ankles . As you approach the river below , the bungee cord begins to stretch and you begin to slow