Question 1

A consumer is indifferent between one pizza and one burrito. The price of burritos and pizza arePb= $3andPp= $4.

1.1Write the utility function for the consumer. Suppose the consumer has$12to spend on food, how many burritos and pizza will they consume? Plot the budget constraint and indifference curves. [3]

1.2Suppose the price of a burrito increases toPb= $4.50. How will the consumer's choice of consumption bundle change? Plot the budget constraint and indifference curves in this case. [3]