1. [10 Points] The preferences of a consumer are represented by the following utility function: U = x1x2. If income is 100 and p1 = p2 = 1, a) What is the optimal bundle? b) If p2 = 4, what is the new optimal bundle? c) Decompose the price effect into income and substitution effect. d) Provide a graphical representation of your results.

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