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Utility cobb douglas function = 2X.5Y2 MUx =Y2/X.5 MUy =4X.5Y Px=1 PY=2 and M=100 1.Graph the...

Utility cobb douglas function = 2X.5Y2

MUx =Y2/X.5 MUy =4X.5Y Px=1 PY=2 and M=100

1.Graph the consumer optimization problem in(X,Y) space. Clealy label the precise location of the optimal bundle, the budget constraintm, and the shape of the furthest obtainable indifference curve.

2.Assume Px increase to 2. What is the total effect of the price change in terms of X and Y.

3. What is the precise location of the bundle used to decompose the substitution and income effect?

4.What is the substitution effect due to the change in Px? State your answer in terms delta Xand delta Y .

5. What is the income effect due to the change in Px​? State your answer in terms Delta X and Delta Y .

6.What is the compensating Variation assciated with this price change?

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