1. (a)How much utility does the consumer get if he shops at store A?
2. (b)How much utility would he get if he shopped at store B?
3. (c)Store B is considering offering a gift certificate to attract the consumer. What must the minimum value of the gift certificate be for store B to succeed?
4. (d)No gift certificate. But store A is in danger of going out of business. How much would the consumer be willing to pay to keep store A in business?

Question 4 A consumer has a utility function U(x1, 22) = 02 + 22 It is known that, when prices and income are given by p1, p2 and m, the demand functions are x1 (P1, P2, m) = mp2 pi(P1 + p2)' x2 (P1, P2, m) = mp1 P2 (P1 + p2) , and her utility at these prices and income is v(P1, p2, m) = U(x1(P1, p2, m), x2(P1, P2, m)) m(p1 + p2) P1P2 Initially the consumer has an income of 12. He shops at store A, where the prices are p1 = 1 and p2 = 2. He could alternatively shop at store B, where the prices are p1 = 2 and p2 = 2. (a) How much utility does the consumer get if he shops at store A? (b) How much utility would he get if he shopped at store B? (c) Store B is considering offering a gift certificate to attract the consumer. What must the minimum value of the gift certificate be for store B to succeed? (d) No gift certificate. But store A is in danger of going out of business. How much would the consumer be willing to pay to keep store A in business