1.Consumers in Georgia pay twice as much for avocados as they do for peaches. However, avocados and peaches are the same price in California. If consumers in both states maximize utility, will the marginal rate of substitution of peaches for avocados be the same for consumers in both states? If not, which will be higher?
2. Ben allocates his lunch budget between two goods, pizza and burritos.
a. Illustrate Ben"s optimal bundle on a graph with pizza on the horizontal axis.
b. Suppose now that pizza is taxed, causing the price to increase by 20 percent. Illustrate Ben"s new optimal bundle.
c. Suppose instead that pizza is rationed at a quantity less than Ben"s desired quantity. Illustrate Ben"s new optimal bundle.