1. 2.9 Fangwen’s utility function is U(q1, q2) = q1 + q2.

The price of each good is $1, and her monthly income is $4,000. Her firm wants her to relocate to another city where the price of q2 is $2, but the price of q1 and her income remain constant. What would be her equivalent variation or compensating variation? M 3. Effects of Government Policies on Consumer Welfare