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Need Steps and Explanation Imagine there are two goods, caviar (C) and wine (W), and your utility function is U = C'/2w /2. The price

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Imagine there are two goods, caviar (C) and wine (W), and your utility function is U = C'/2w /2. The price of caviar is $20 per unit and the price of wine is $30 per unit, and you have a "caviar and wine budget" of $1200. a) Calculate the utility maximizing bundle (A) of caviar and wine: i) C= ii) W= b) Imagine the price of caviar increases to $60 per unit. Calculate the new utility maximizing bundle (B) of caviar and wine: C = ii) W= c) If there is a bundle (C) at which C = 17 and W = 35, which corresponds to the compensated price change for caviar, calculate the magnitude of each effect (in terms of units of caviar): i) Substitution Effect: ii) Income Effect: d) On the diagram provided below, graph bundles (A) and (B) from above, with their corresponding budget lines (BL1 and BL2) and stylized indifference curves (I1 and 12). Please label each bundle and give its values on the x and y axes, and also label each budget line and give its x and y intercepts. (These two budget lines must have correct x and y intercepts. Indifference curves must have the conventional shape and must be consistent with the other elements in your graph, but need not be plotted precisely point-by-point.) e) On the same diagram, graph bundle (C), with its budget line (BL3) and indifference curve (13). f) On the caviar axis of the graph, label both the substitution effect and the income effect. Wine Caviar

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