Tyler consumes video games and other goods. His utility function is Tyler consumes video games and other goods. His utility function is ?(?,?)=100?-(x^2)/2 +?,where ? is the number of video games consumed, which is an integer amount, and ? is themoney to be spent on other goods. Tyler has an income $10,000. Suppose the price of video gamesincreases from $50 to $80.(a) How does Tylers net consumers surplus change as a result of the price change?(b) Calculate the compensating and equivalent variations for Tyler.(Hint: With a quasilinear utility function ?(?,?)=?(?)+?, the inverse demand function forthe ?-good is given by ?(?)=?'(?).)Business Economics
