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Business, 30.03.2021 16:50 jazzycintron14

Hamlet has monotonic, strictly convex, quasilinear preferences over widgets, x, and money to spend on other goods, m, wheremis the linear term. Consider a $1 increase in the price of widgets. Hamlet knows that he if he were given $20 after the price change, his new optimal bundle would give him exactly the same utility that he had before the price change. Which of the following can be concluded from this information? (You may assume that Hamlet's income is large enough that however many widgets he might want to buy, he'll still have money left over for other goods.) A) Hamlet's compensating variation is $20.
B) Hamlet's equivalent variation is $20.
C) Hamlet's (net) consumer surplus falls by $20 due to the price change.
D) All of the above are true.
E) None of the above are true.

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Hamlet has monotonic, strictly convex, quasilinear preferences over widgets, x, and money to spend o...
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