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Calculate his income and substitution effects of a decrease

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Reference no: EM13331478

Lou's preference over pizza(x) and other goods(y) are given by U(x,y) = xy, with associate marginal utilities MUx=y and MUy=x. His income is $120.

Initial Prices: Px=4 Py=1

Calculate his income and substitution effects of a decrease in the price of food (Px) to $3.

Reference no: EM13331478

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