luca gets utility from commodities x1 and x2 and his preferences can be represented by the utility function, U(x1,x2)=X1^0.5 X2^0. Suppose Luca has…

luca gets utility from commodities x1 and x2 and his preferences can be represented by the utility function, U(x1,x2)=X1^0.5 X2^0.5. Suppose Luca has an income of $100, p1=0.5 p2=2. Suppose p2 fall to $0.50. Identify the original and the new commodity bundle and decompose the change in x1 and x2 into income and substitution effects.

 
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