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Any assistance would be appreciated; have already finished the first section of the problems but having trouble with the last Boris has a monthly net

Any assistance would be appreciated; have already finished the first section of the problems but having trouble with the last

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Boris has a monthly net income I = $4,000 and consumes two goods: Housing (H, measured in square feet) and a composite of other goods (Y, py=$1). The price of Housing is pH = $2 per square foot. Boris's utility function is: U (H, Y) = H - Y MUH _ His marginal rate of substitution of Housing (H) for Y is: MRS\" = MUY E (a) What levels of consumption (H and Y) will Boris choose optimally? Calculate and show the optimal bundle, labeled A, on the graph from (a). Draw the indifference curve passing through A (schematically, no calculations needed), labelling it ICA. (b) Now suppose the government introduces a housing subsidy of $0.40 per square foot of Housing, lowering the price faced by Boris to $1.60 per sguare foot. On the same graph from part (a), draw the new budget line and label it \"BLB\". Please label the slope and the intercepts. (c) What is the new optimal bundle that Boris will choose under the subsidy? Calculate and show the optimal bundle, labeled B, on the graph from (a). Draw the indifference curve passing through B (schematically, no calculations needed), labelling it '03. (d) Finally, we are looking for the Compensating Variation to characterize the welfare effect of the subsidy (i.e. the price decrease from $2 to $1.60). Calculate the Compensating Variation and explain in words how to interpret it. Show it graphically. [Add it to the graph from part (a) or draw a new one. ]

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