Question: Derek has preferences over bread (xb) and cheese (xc), which are described by the utility function, U(xb, xc) = xb^a xc^(1-a) , where 0 <

Derek has preferences over bread (xb) and cheese (xc), which are described by the utility function, U(xb, xc) = xb^a xc^(1-a) , where 0 < a < 1 is a parameter. Following an increase in the price of bread, we observe that Derek's consumption of bread falls from 7 to 3. Moreover, we're told that the income effect associated with this price increase is equal to 1. Based on this information, what must be the value of the parameter, a?

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