Question
I am going to put almost the entirety of this question here but put important info below that. X denotes her number of round trips
I am going to put almost the entirety of this question here but put important info below that.
X denotes her number of round trips to Italy each year. The composite good y measures her annual consumption of other goods; the price of the composite good is Py, which is constant in this problem. I have been given several indifference curves with the levels of utility U1 I= 18000 X=#number of trips Y=Trip Price (?) Trip price decreases from 3000 -> 1000. So in the question I am wanting to use the substitution effect but am wondering about the wording used here. Does the phrase composite good change anything? or the fact that it being constant do something to the equation?
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