In what sense is consumer surplus a reasonable


Without doing any math, or drawing a graph, which is bigger, compensating variation or equivalent variation for a tax? Consider an individual with Cobb-Douglas preferences over some good and all other goods. In what sense is consumer surplus a reasonable approximation of the negative impact of a price change on the individual? Explain how you know, making sure to define each of these types of variation.

Solution Preview :

Prepared by a verified Expert
Basic Computer Science: In what sense is consumer surplus a reasonable
Reference No:- TGS02919569

Now Priced at $20 (50% Discount)

Recommended (97%)

Rated (4.9/5)