of peaches for avocados be the same for consumers in both states?Ifnot,which will be higher? The marginal rate of substitution of peachesr avocados is the amount of avocados that a person is willing to give up to obtain one additional peach. When consumers maximize utility,they set their marginal rate of substitution equal to the price ratio,which in this case is .In P Georgia.which means that when consumers are 。s,s-子之-片heha- which means that when consumers are maximizing utility MIRS=- same in both states,and will be higher in California 12. Ben allocates his lunch budget between two goods,pizza and burritos Illustrate Ben's optimal bundle on a graph with pizza on the horizontal axis. This is the standard graph,where Ben's budget line is linear and he consumes at the point where his indifference curve is tangent to his budget line.This places him on the highest possible indifference curve. Suppose now that pizza is taxed,causing the price to increase by 20%. Illustrate Ben's new optimal bundle. of Ben's budget set and he will no longer be able to afford his old bundle.His new optimal bundle is where th indifference curve is tangent to his new budget line and this indifference curve is below his original indifference curve. Suppose instead that pizza is rationed at a quantity less than Ben's desired quantity.Illustrate Ben's new optimal bundle. Rationing the quantity of pizza that can be purchased will resu in Ben not being able to choose his optimal bundle.He will have to choose aof peaches for avocados be the same for consumers in both states? If not, which will be higher? The marginal rate of substitution of peaches for avocados is the amount of avocados that a person is willing to give up to obtain one additional peach. When consumers maximize utility, they set their marginal rate of substitution equal to the price ratio, which in this case is Ppeach Pavocado . In Georgia, Pavocado = 2Ppeach , which means that when consumers are maximizing utility, MRS = Ppeach Pavocado = 1 2 . In California, Pavocado = Ppeach , which means that when consumers are maximizing utility, MRS = Ppeach Pavocado = 1 1 . The marginal rate of substitution is therefore not the same in both states, and will be higher in California. 12. 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. This is the standard graph, where Ben’s budget line is linear and he consumes at the point where his indifference curve is tangent to his budget line. This places him on the highest possible indifference curve. b. Suppose now that pizza is taxed, causing the price to increase by 20%. Illustrate Ben’s new optimal bundle. When the price of pizza increases, the budget line will pivot inwards. This will shrink the size of Ben’s budget set and he will no longer be able to afford his old bundle. His new optimal bundle is where the indifference curve is tangent to his new budget line and this indifference curve is below his original indifference curve. c. Suppose instead that pizza is rationed at a quantity less than Ben’s desired quantity. Illustrate Ben’s new optimal bundle. Rationing the quantity of pizza that can be purchased will result in Ben not being able to choose his optimal bundle. He will have to choose a