Question
Sam's is interested in two goods, X and Y. His indirect utility function is U* =...
Sam's is interested in two goods, X and Y. His indirect utility function is
U* = M px-.6 py-4. ( same as U* = M /(px.6 py0.4 ) )
where
M is Sam's income, and px and py denote respectively the price of good X and the price of good Y.
Sam's market demand functions are X*=0.6M/px and Y* = 0.4M/py .
Find the absolute value of the change in Sam's consumers surplus if the price of good X rises from 1 to 4.3 dollars assuming his income is M=152.3 and price of good Y is equal to 1.
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