1. 6.1 In the Challenge Solution, suppose that housing was relatively less expensive and food was rela tively more expensive in London than in Seattle, so that the LL budget line cuts the LS budget line from below rather than from above, as in the Chal lenge Solution’s figure. Show that the conclusion that Alexx is better off after his move still holds.

Explain the logic behind the following statement:

“The analysis holds as long as the relative prices differ in the two cities. Whether one price or the other is relatively higher in London than in Seattle is irrelevant to the analysis.”