Answer

4. As we noted in the last question, the price of beer rose from $1 to $2. In order to compensate Fred (using the expenditure method of compensation) for the income effect of the price increase we need to increase his daily income by:

$2.

$3.

$4.

$5.
$6.

Fred's Marginal Utility
Q	MU Brats	MU Beer
1	16	11
2	14	10
3	12	9
4	10	8
5	8	7
6	6	6
7	4	5
8	2	4