4) A convenient way to calculate the compensating variation (CV) is to use the expenditure function. Suppose an individual has the utility function: U(91,92) 919- ii. iii. i. Solve for quantities (91,92) as a function of income and expenditures (income). 91 Plug values from part (i) back into utility function, solving for as a function of expenditures (income) and prices. Now we want to know necessary expenditures (income level) to maintain utility level when prices change. To do this, we solve for expenditures as a function of prices and . a) What is the expenditure function of individual facing prices P1, P2, and expenditures, E (equivalent to income y). b) How can we use the expenditure function to calculate the compensating variation? Why is compensating variation useful?