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Priyesh's preferences for goods x and y is given by the utility function U = x + 2y ?. His income is $500, and the
Priyesh's preferences for goods x and y is given by the utility function U = x + 2y ?. His income is $500, and the price of good y is always $1. Suppose the price of x starts at $10 and then increases to $15. Calculate the income effect on good x and the substitution effect on good y. a. IE: -10 x; SE: +0 y b. IE: -11.67 x; SE: +125 y C. IE: -21.67 x; SE: +125 y d. IE: -10 x; SE: +125 y e. IE: -11.67 x; SE: + 0y
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