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Suppose that U{x1.x2] = 1(le . Let p1=1 and p2=1. and Income {I} = $100. Let the price of good 1 increase to $2. a}
Suppose that U{x1.x2] = 1(le . Let p1=1 and p2=1. and Income {I} = $100. Let the price of good 1 increase to $2. a} calculate the income and substitution effects associated with this price change; {4 points} Is} determine the compensating variation associated with this price change. {3 points}
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