Lars Spends All of His Income on Pizza and Gasoline

Multiple Choice

Lars spends all of his income on pizza and gasoline. Suppose Lars is presented with two options: A and B. Option A will subsidize gasoline by decreasing its price by 50%. Option B will increase Lars's income by the cost of the subsidy in Option A. Assuming Lars is indifferent between Option A and Option B, which of the following is correct?

A) Lars gains more utility from Option A than Option B.
B) Lars purchases at least some pizza and at least some gasoline.
C) Lars gains more utility from Option B than Option A.
D) Lars must spend all of his money on gasoline.