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Lisa eats both pizzas and burritos. If the price of a pizza increases, Lisa's opportunity setGroup of answer choicesbecomes larger.becomes smaller.is unchanged.cannot be determined without more information.

Question

Lisa eats both pizzas and burritos. If the price of a pizza increases, Lisa's opportunity setGroup of answer choicesbecomes larger.becomes smaller.is unchanged.cannot be determined without more information.

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Solution

Lisa's opportunity set becomes smaller.

Here's why:

  1. The opportunity set represents all the combinations of goods (in this case, pizzas and burritos) that Lisa can afford to buy with her income.

  2. If the price of pizza increases, then Lisa can afford to buy fewer pizzas with the same amount of income. This means that the number of combinations of pizzas and burritos that she can afford to buy decreases.

  3. Therefore, Lisa's opportunity set becomes smaller when the price of pizza increases.

This problem has been solved

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