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m is income. m=32 Orignially: P1=2, P2=2. There are only two goods purchased with the income. C is the demand function for good 2. C=3m/4P1

m is income. m=32

Orignially: P1=2, P2=2. There are only two goods purchased with the income. C is the demand function for good 2.

C=3m/4P1

A new price for P2 is 4. Find the change in consumption and and separate this change into income and Slutsky substitution effects.

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