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Brad's preferences are represented by the following utility ?(?,?)=?^(1/4)?^(3/4) pz=5, pw=15 and Brad's income I=20. The...

Brad's preferences are represented by the following utility ?(?,?)=?^(1/4)?^(3/4) pz=5, pw=15 and Brad's income I=20. The government subsidies consumption of good w, the price of w with subsidy is pw′=0.8pw. Compute the change in Brad's income that will keep Brad as well-off as without the subsidy (i.e. we want to keep Brad's utility fixed). Remember that the change in income is ?new−?old:

a.

3.0821

b.

-3.0821

c.

4.0214

d.

-4.0214

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