Another Example Calculating Income and Substitution Effects, Compensating Variation

Here is yet another example of maximizing utility, calculating income and substitution effects, and compensating variation. We use a Cobb-Douglas Utility Function, and graph the budget lines and solutions.

[@muhammadfurqan1747]

Very very useful video... Now i got clear vision of income and substitution effect of price change

[@DiggybackGaming]

Again, thank you very much for this! It was very useful.

[@collin1992]

Thanks for your video, it was alot of help

[@abirsarkar7075]

Your videos are really helpful. Thank you burkey academy.

[@williamkanyinji8823]

Thanks so much for the video. I have now learnt a great deal about these stuff

[@BurkeyAcademy]

Glad to hear it! I have another on this topic I am editing now, I'll try to get it up soon.

[@yashgupta1932]

Thank you very much....it is quite helpful

[@christophercovington7543]

Thanks

[@melkamudereje3217]

Dar professor, how do we prove Roy's identity step by step?

[@BurkeyAcademy]

Hal Varian's Microeconomic Analysis, 3rd edition, has two different proofs in Chapter 7.

[@ruthollivierre4364]

So would the equivalent variation be +$13.64 as well?

[@BurkeyAcademy]

No, equivalent variation will not be the same. Here is a video describing E.V. along with the other stuff: ruclips.net/video/ShWYZbI8_aA/видео.html

[@NerdJake]

What does this point mean in your videos?

[@dylans8198]

Another video where the CV and EV formulas aren't just listed for no reason

[@BurkeyAcademy]

Sorry about that. You can google formulas or look them up in your textbook if that is what you want. In my opinion videos are for showing the HOW and the WHY. I could be wrong, though. ☺