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Jason always eats 2 slices of pizza with each beer. What would be an appropriate utility...

Jason always eats 2 slices of pizza with each beer. What would be an appropriate utility function to describe Jason's preferences? Draw a set of indifference curves for Jason. What would happen to Jack's indifference curves if the price of pizza were to go up?

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Answer #1

Given that Jason always eats 2 slices of pizza (P) with each beer (B) which means the two goods are perfect complements and are consumed together such that P/B = 2/1. Hence the utility function is U = min(2B, P)

The indifference curves are all L shaped with a kink at 2B = P

There is no substitution effect of a higher price of pizza but the income effect will indicate that the consumption of both pizza and beer will decrease.

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