Assume that you have the following utility,

Assume that you have the following utility,

Assume that you have the following utility, income, and prices: (SEE ATTACHED)

i solved a and b but need help with c, d,e and f



A. Given this consumer’s preferences and budget constraint, the optimal bundle is:
X =75Y = 25/3
B. If PX increases to $3, the new optimal bundle is:
X = 25 Y =25/3

C. What is the substitution effect of the price change in terms of X?
Substitution Effect = __________


D. What is the income effect of the price change in terms of X?
Income Effect = __________

E. How much income would it take to return the consumer to the original level of utility after
the change in PX ? In other words, what is the compensating variation?
Compensating Variation = _$_________


F. draw a graph which illustrates the effect of the price change and
how the compensating variation would return the consumer to the original level of utility. Label all the
relevant bundles, intercepts, indifference curves, budget constraints, and axes