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IX. Consider again a consumer with utility function u (21, X2) = 2 In 21+ In x2. The consumer's income is I = 120 and

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IX. Consider again a consumer with utility function u (21, X2) = 2 In 21+ In x2. The consumer's income is I = 120 and prices are initially p = 2 and p2 = 1. Suppose that, after the government introduces a 1$ subsidy per unit of good 1, the consumer price of good 1 decreases to p = 1. a) Determine the equivalent variation (EV) and the compensating vari- ation (CV). b) Determine the deadweight loss of the subsidy using EV and using CV. c) Express the deadweight loss as a percent of the government's subsidy- related expenditure

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