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3. (16 Total Points) Suppose a consumer's utility function is given by U(X, Y) = MIN (4X, V). Also, the consumer has $48 to spend, and the price of Good X. Px - $2. Let Good Y be a composite good (Good Y is the "numeraire") whose price is Py - $1. So on the Y-axis, we are graphing the amount of money that the consumer has available to spend on all other goods for any given value of X. a) (4 points) What is the Indirect Utility Function? a) Uemin ( 48.4) V = 4x and Vey P V(Px, PY. M) = 4m / ( PX + 4P) -= 1 an vey b) (4 points) What is the Expenditure Function? V = 4m V ( P x + 4 Py ) = 4m PX + 4 Py M(PX, PY, V) = V (P(4 4P) / 4 V ( P X + 4 py) = m Now suppose Px increases to $4. 4 c) (4 points) Calculate the Compensating Variation: (Note that since Px increases, this will be a positive number.) Px = 2 Py = 1 m= 48 CV = $16 d) (4 points) Calculate the Equivalent Variation: (Note that since Px increases, this will be a positive number.) EV =