Answer
a) Please see the graph.
b) More pizza and less soda will be consumed.
c) No
Work Step by Step
a) The graph shows two different budget constraints and the indifference curve. Since there is an increase in the price of soda and a decrease in the price of pizza, that's why we have a second budget constraint.
b) The income effect isn't used since you are equally happy (since you are still on the same indifference curve). The substitution effect is used since we are substituting soda for pizza.
c) The original ideal bundle (A on the graph) is outside the new budget constraint, so it cannot be consumed.
