Makenna gets utility from pizza and chocolate milk. Makenna's parents give her an allowance that will...

 

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Makenna gets utility from pizza and chocolate milk. Makenna's parents give her an allowance that will allow her to purchase her original commodity bundle, no matter how prices change. Given her parent's method to calculate her allowance, will Makenna be better off, worse off or be indifferent to an INCREASE in the price of pizza? Assume Makenna's preferences are consistent with diminishing MRS and her original commodity bundle is 10 pizzas and 5 chocolate milk. ILLUSTRATE, using budget lines and indifference curves, and EXPLAIN your answer. Chocolate Milk Pizza Assume INSTEAD that Makenna views pizza and chocolate milk as perfect complements and her original commodity bundle is 10 pizzas and 5 chocolate milk. How does this change your answer about the effect of an increase in the price of pizza? Explain carefully. Makenna gets utility from pizza and chocolate milk. Makenna's parents give her an allowance that will allow her to purchase her original commodity bundle, no matter how prices change. Given her parent's method to calculate her allowance, will Makenna be better off, worse off or be indifferent to an INCREASE in the price of pizza? Assume Makenna's preferences are consistent with diminishing MRS and her original commodity bundle is 10 pizzas and 5 chocolate milk. ILLUSTRATE, using budget lines and indifference curves, and EXPLAIN your answer. Chocolate Milk Pizza Assume INSTEAD that Makenna views pizza and chocolate milk as perfect complements and her original commodity bundle is 10 pizzas and 5 chocolate milk. How does this change your answer about the effect of an increase in the price of pizza? Explain carefully.

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Explanation where Ppizza is the price of pizza Pmilk is the price of chocolate milk and I is her inc... View the full answer