For each of the following situations where the price of x decreases from

For each of the following situations where the price of x decreases from p1x to p2x (a-b), calculate the following:

i) the optimal basket at time 1 and time 2

ii) the income and substitution effect. What type of good does this suggest good x is?

iii) the compensating and equivalent variation. Explain in words what these mean

(a) u(x,y) = 7xy, p1x = 8, p2x = 2, py = 5, I = 80.

(b) u(x,y)=6x^1/3 y^2/3 ,p1x =8, p2x =1, py =2, I=48.

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