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
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