Avery has preferences over gum (1) and lollipops (2) with her utility function given by (1, 2 ) = 1 22 . Initially, the prices of gum (p1) is $2 and the price of lollipops (p2) is $1. Avery has an income (m) of $18.

e) If the price of gum increases to $3, find his optimal consumption bundle and his utility level before and after the price change.

f) Calculate the compensating variation and equivalent variation of the price change (round your answers to two decimal places). What is the relationship between compensating variation and equivalent variation?