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Paul consumes only two goods, pizza (P) and hamburgers (H) and considers them to be
perfect substitutes, as shown by his utility function: U(P, H) = P 4H. The price of pizza is $3
and the price of hamburgers is $6, and Paul’s monthly income is $300. On his birthday, his
grandmother gives a choice of two: either a birthday gift certificate of $60 redeemable only at
Pizza Hut, or $30 in cash. Which gift would he prefer?
