Essay
Steve's utility for socks (q₁)and other goods (q₂)is given by
U(q₁,q₂)= 10q₁.¹ q₂.⁹
The price of the composite good is p₂=1 and the price of a pair of socks is p₁=2.Steve's income is Y=100.Every year,Steve's mom buys him 20 pairs of socks.Find the equivalent variation of the gift.What is the difference between the cost of the gift and the equivalent valuation cash amount?
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