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Sofia spends all of her income on pizza and gasoline. Suppose Sophia is presented with two options: A and B. Option A will subsidize gasoline
Sofia spends all of her income on pizza and gasoline. Suppose Sophia is presented with two options: A and B. Option A will subsidize gasoline by decreasing its price by 50%. Option B will increase Sophia's income by the cost of the subsidy in Option A. Assuming Sophia strictly prefers Option B to Option A, which of the following must be true?
Sophia gains more utility from pizza than gasoline.
Sophia gains more utility from gasoline than pizza.
Sophia only consumes gasoline.
Sophia consumes at least some of each good.
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