Suppose that a consumer has the utility function u(x1,x2) : quantity of good i consumed, i = 1, 2. The consumer has exogenous income m = prices p1 = 1 and p2 = 1 for goods 1 and 2, respectively. = x1x2, where x; represents the 50 and faces Given the new prices, p 3 and p2 = 4, What is the maximum amount that this consumer would be willing pay in order to prevent the price increases?

Suppose that a consumer has the utility function u(x1,x2) : quantity of good i consumed, i = 1, 2. The consumer has exogenous income m = prices p1 = 1 and p2 = 1 for goods 1 and 2, respectively. = x1x2, where x; represents the 50 and faces Given the new prices, p 3 and p2 = 4, What is the maximum amount that this consumer would be willing pay in order to prevent the price increases?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics

Section: Chapter Questions

Problem 6QP

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