Suppose Rajesh has a utility function resulting in an MRS = Y / X (from U = √XY) and he has an income of $240 (i.e. M = 240). Suppose he faces prices PX = 8 and PY = 10. If the price of good Y goes down to PY = 8, while everything else remains the same, find Rajesh’s compensating variation (CV).
The answer is CV = -25.34, please show your work
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