Jim's utility function is U(q 1 , q 2 ) = min(q 1 , q 2 ).
Question:
Jim's utility function is U(q1, q2) = min(q1, q2). The price of each good is $1, and his monthly income is $4,000. His firm wants him to relocate to another city where the price of q2 is $2, but the price of q1 and his income remain constant. Obviously, Jim would be worse off due to the move. What would be his equivalent variation or compensating variation?
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Initially Jim purchases2000 units of each good After the move he purchases ...View the full answer
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Related Book For 
Microeconomics Theory and Applications with Calculus
ISBN: 978-0133019933
3rd edition
Authors: Jeffrey M. Perloff
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