1-a Alice only consumes bread (x) and butter (x2). Her preferences over these goods are represented...

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1-a Alice only consumes bread (x₁) and butter (x2). Her preferences over these goods are represented by u(x₁, x₂) = xx, where 1 > a > 0. 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 = 1-a Alice only consumes bread (x₁) and butter (x2). Her preferences over these goods are represented by u(x₁, x₂) = xx, where 1 > a > 0. 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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SOLUTION a To find Alices optimal bundle of bread and butter in Town B we need to maximize her utili... View the full answer