Alice only consumes bread (x₁) and butter (x2). Her preferences over these goods are represented by u(x1, x2) = x1x2 Alice used to live in Town A. There, she had an income of m= 12 and faced prices p₁ = 1 and P2 = 2. Now, Alive lives in Town B, where her income is still m= 12 but prices are p₁ = 5 and P₂ = 1. If rounding is needed, please round to 3 decimal places. a) When Alice chooses an optimal bundle of bread and butter in Town B, her MRS1,2 at that bundle is b) If Alice is exactly as satisfied with her optimal bundle in Town B as she was with her optimal bundle in Town A, this means that a=

Alice only consumes bread (x₁) and butter (x2). Her preferences over these goods are represented by u(x1, x2) = x1x2 Alice used to live in Town A. There, she had an income of m= 12 and faced prices p₁ = 1 and P2 = 2. Now, Alive lives in Town B, where her income is still m= 12 but prices are p₁ = 5 and P₂ = 1. If rounding is needed, please round to 3 decimal places. a) When Alice chooses an optimal bundle of bread and butter in Town B, her MRS1,2 at that bundle is b) If Alice is exactly as satisfied with her optimal bundle in Town B as she was with her optimal bundle in Town A, this means that a=

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1-a
Alice only consumes bread (x₁) and butter (x₂). Her preferences over these goods are represented by u(x₁, x₂) = x1x₂. Alice used to
live in Town A. There, she had an income of m= 12 and faced prices p₁ = 1 and P2 = 2. Now, Alive lives in Town B, where her income is
still m= 12 but prices are p₁ = 5 and P₂ = 1.
If rounding is needed, please round to 3 decimal places.
a) When Alice chooses an optimal bundle of bread and butter in Town B, her MRS1,2 at that bundle is
b) If Alice is exactly as satisfied with her optimal bundle in Town B as she was with her optimal bundle in Town A, this means that
a=

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