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2. Paula's preferences for goods x and y are given by the utility function, U 2 x1 '9 y 2. Her income is $160, and
2. Paula's preferences for goods x and y are given by the utility function, U 2 x1 '9 y \"2. Her income is $160, and the price of good y is always $20. Suppose the price of x starts at $20 and then decreases to $5. a. Calculate the income, substitution, and total effects of the price decrease on both goods. Show your work for full credit and round to 2 decimal places where appropriate. (1 1 points) Use a clearly labeled graph to illustrate the total, income, and substitution effects of the price decrease on Paula's consumption of goods x and y. ( 13 points)
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