Question: Ben allocates his lunch budget between two goods, pizza and burritos. a. Illustrate Bens optimal bundle on a graph with pizza on the horizontal axis.

Ben allocates his lunch budget between two goods, pizza and burritos.
a. Illustrate Ben’s optimal bundle on a graph with pizza on the horizontal axis.
b. Suppose now that pizza is taxed, causing the price to increase by 20%. Illustrate Ben’s new optimal bundle.
c. Suppose instead that pizza is rationed at a quantity less than Ben’s desired quantity. Illustrate Ben’s new optimal bundle.

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a In the diagram below Bens income is I the price of pizza is P Z and the price of burritos is P B B... View full answer

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