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Question 1: Jon Snow consumes pizza and burgers. His utility function is u(P, B] 2 PB where P is the number of pizzas and B
Question 1: Jon Snow consumes pizza and burgers. His utility function is u(P, B] 2 PB where P is the number of pizzas and B is the number of burgers. ]on Snow has $31] to spend, and he plans to spend it all on pieza and burgers. The price of one pizea is $10 and the price of one burger is $3. {a} Find and label Jon Snow's initial optimal bundle on a graph where pizza is on the x-axis and burgers are on the y-axis. Label this point A. [bl Suppose that the local burger restaurant is mnning a pntnmotion selling burgers at $2 a burger. Solve for Jon Snow's new optimal bundle. Label this bundle B on your graph from part (a). {c} Find the substitution effect, income effect, and the total effect for both goods following the decrease in the price of burgers from $3 to $2. Label the intermediate bundle used to find the substitution and income effects point C on your graph from part [a]. [cl] Are pizza and burgers normal or inferior goods? Explain your
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