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Lisa Consumes Only Pizzas (P)and Burritos (B)

Question 106

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Lisa consumes only pizzas (P)and burritos (B).Her utility function is U = P0.5 B0.5.The price of per pizza is $10 and the price per burrito is $5.In equilibrium,Lisa consumes four pizzas.Using Lisa's utility function,calculate how many burritos she consumes.

Correct Answer:

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The marginal utility of pizza equals B0.5/2...

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