Consider Tasmanian households that have a utility function given by U=10^(-70) XY^15 where X is kilowatt-hours (kWh) of electricity and Y is dollars of spending on all other goods per year. Assume household annual disposable income is M and the price of electricity per kWh is P_X.

Calculate the size of the income and substitution effect for the $0.05/kWh subsidy and the lump-sum subsidy. Why does the $0.05/kWh subsidy encourage more electricity use than the lumpsum subsidy?