Naulin Mombo 03/15/24 9:49 AM ? Question 1, Concept Question 3.6 HW Score: 0%, 0 of 7 points Part 1 of 4 O Points: 0 of 1 Save Michelle spends all her money on food and clothing. When the price of clothing decreases, she buys more clothing. In the diagram to the right, the substitution effect is defined by the movement from point B ClothingNaulin Mombo 03/15/24 9:50 AM Question 2, Text Exercise 21 HW Score: 0%, 0 of 7 points S, O Points: 0 of 1 In the application "Compensating Variation and Equivalent Variation for the Internet,\" people are asked how much they would have to be paid not to use the Intarnet or what else they'd have to give up to keep using it. Use a graph to illustrate the compensating variation and equivalent variation in this Application. In the figure, the individual is initially maximizing utility at bundle e, on budget line L' on indifference curve 3 . . I\". Then the price of Internet service increases, pivoting the budgest lina to Lz. The consumer maximizes utility at the new prices at bundle e, on Other goods N 1 indifference curve | . A new budget line representing the amount of money the individual would have to receive with the new prices to have the same initial level of utility is line LElr and the utility-maximizing bundle on budget line 17 is Internet bundle e, & new budget line representing the amount money the ndividual would have to give up with the initial prices '0 have the same level of utility as with the new prices s line L4 and the utility-maximizing bundle on budget ine L4 is bundle By f the price of good Y is $1.00, then, as a function of the various budget line y-intercepts (Y's), compensating variation is positive and equal to the vertical distance CV= |:| (Properly format your expression using the tools in the palette. Hover over fools to see keyboard shorfcuts. E g., 8 subscript can be created with the _ character.) Naulin Mombo 03/15/24 8:52 AM (?) Question 3, Text Exercise 2.1 HW Score: 0%, 0 of 7 points Part 1 of 2 C} 271 )i In the application "Compensating Variation and Equivalent Variation for the Internet,\" people are asked how much they would have to be paid not to use the Intarnet or what else they'd have to give up to keep using it. Use a graph to illustrate the compensating variation and equivalent variation in this Application. In the figure, the individual is initially maximizing utility at bundle e; on budget line L on indifference curve 3 , L. I\". Then the price of Internet service increases, pivoting the budget line to LZ. The consumer maximizes utility at the new prices at bundle e, on Other goods v 1 indifference curve | . A new budget line representing the amount of money the individual would have to receive with the new prices to have the same initial level of utility is line LE,r and the utility-maximizing bundle on budget line 1% is Internat bundle ;. A new budget line representing the amount money the individual would have to give up with the initial prices to have the same level of utility as with the new prices is line L'dr and the utility-maximizing bundle on budget , 4, line L is bundle 8y If the price of good Y is $1.00, then, as a function of the various budget line y-intercepts (Y's), compensating variation is positive and equal to the vertical distance CV = (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a subscript can be created with the_ character.)Question 4, Text Exercise 2.5 HW Score: 0%, 0 of 7 points