Explanation When price of pizza is $1, then the maximum utility combination occurs at 3 units of Beer and 4 units of Pizza, where marginal utility per dollar (MU/P) is approximately equal. So, the demand for pizza at $1 is 4 units. And when the price of pizza is increased to $2, the utility optimization occurs at 3 units of beer and 2 units of pizza, where the marginal utility per dollar is approximately equal. So, the demand for pizza at $2 is 2 units. Pizza slices TU MU MU/P P=$1 MU/P P=$2 Beer TU MU MU/P P=$2 1 200 200 200 100 1 500 500 250 2 380 180 18... To determine (b) Demand curve when income changes to $12.

10th Edition

ISBN: 9781285859460

Author: BOYES, William

Publisher: Cengage Learning

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Question

Chapter 21, Problem 4E

To determine

(a)

Demand curve for pizza.

To determine

(b)

Demand curve when income changes to $12.

Expert Solution & Answer

Chapter 21 Solutions

Economics:

Ch. 21 - Prob. 1E Ch. 21 - Prob. 2E Ch. 21 - Prob. 3E Ch. 21 - Prob. 4E Ch. 21 - Prob. 5E Ch. 21 - Prob. 6E Ch. 21 - Prob. 7E Ch. 21 - Prob. 8E Ch. 21 - Prob. 9E Ch. 21 - Prob. 10E

Ch. 21 - Prob. 11E Ch. 21 - Prob. 12E Ch. 21 - Prob. 13E Ch. 21 - Prob. 14E Ch. 21 - Prob. 15E Ch. 21 - Prob. 16E Ch. 21 - Prob. 17E

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