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Slutsky Decomposition Assignment | Homework for You

Author:
November 30th, 2019

(Slutsky) Suppose original prices and income are p1 = 1; p2 = 2; I = 30. Then there is a price shock and price for good 1 increases to p1 = 3. Compute TE, SE, and IE for different utility functions.

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[Requirement: use Slutsky decomposition, instead of Hicks decomposition.]

(a) u(x1; x2) = x1 + x2.

(b) u(x1; x2) = min{x1; x2}. Get Economics homework help today

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