Question: Lisa eats pizzas and burritos. Her utility function is U ( B , Z ) = B 0 . 6 Z 0 . 4 ,
Lisa eats pizzas and burritos. Her utility function is
UB Z B
Z
where Z is the number of pizzas consumed and B is the number of burritos consumed.
The price of burrito is PB and the price of pizza is PZ Lisas income is W
a If PB $ PZ $ and W how many pizzas will Lisa buy?
b If the price of a burrito increases to $ while the price of pizzas remains the same,
how many pizzas will Lisa buy?
c What is Lisas demand function for pizza and for burritos? Note: you should get the
functions that depend on PB PZ and W
d What are the own price elasticities of her demand functions?
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