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3. Consider a firm that has two employees. Employee 1 has a preference order- ing that can be represented by utility function u1(x1,x2) = Inx1

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3. Consider a firm that has two employees. Employee 1 has a preference order- ing that can be represented by utility function u1(x1,x2) = Inx1 + Inx2 while employee 2's preference ordering can be represented by u2(x1,x2) = x1+x2. (a) Sketch a few indifference curves (for example, ones going through bundles (2,2), (4,4), and (6,6), respectively) for each employee. (b) Suppose the firm is located in city C, where the price levels are (p1, p2) = (1, 1). It needs to send one of the two employees to its branch in city S. However, the price levels in city S are (p'j,p2) = (3,1), so the firm may have to pay an additional salary to ensure that the employee is equally well-off in city S as she was in city C. If the firm wants to minimize the additional salary it needs to pay, which employee should it send? Explain using carefully labeled graphs. (c) What if the price levels in city S were p" = (3,2)? Explain using carefully labeled graphs

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