For U=xy3; m=1200; py=2; px0=2; px1=1

Subject:EconomicsPrice: Bought3

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For U=xy³; m=1200; p_y=2; p_x⁰=2; p_x¹=1.

a) Calculate the substitution and income effect [4+4]

b) Draw appropriate diagrams showing budget lines, indifference curves and both effects [6]

c) Calculate income and price elasticity of demand at initial price. [3+3]