Given the Utility Function is U = X 0.7Y 0.3 and Budget is taka 300. The original price was (Px, Py) = (2, 2) and the new price is (Px’, Py) = (4, 2). (a) Draw an angle curve for X by using the above information [Labelling is must] [5] (b) Calculate the value of Compensation variation (CV) and Equivalent variation (EV)? [10] [Hint: Use the knowledge of chapter 5 and 6 to get the solutions for ordinary demand curve]

/in /by

Given the Utility Function is U = X

0.7Y

0.3 and Budget is taka 300. The original price was

(Px, Py) = (2, 2) and the new price is (Px’, Py) = (4, 2).

(a) Draw an angle curve for X by using the above information
[Labelling is must] [5]

(b) Calculate the value of Compensation variation (CV) and Equivalent
variation (EV)? [10]

[Hint: Use the knowledge of chapter 5 and 6 to get the solutions for
ordinary demand curve]

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