The Maxwell School
Syracuse University
Syracuse University
Given:
A household has Cobb-Douglas preferences
Its demand for X is given by X = a*M/Px where a is a parameter
Last year, Px was $10, M was $100 and the household bought 4 units of X
Determine:
What would Px have to be for the household to increase its consumption of X to 8 units (with no change in income)?