Question: For Alexi, coffee and tea are perfect substitutes: One cup of coffee is equivalent to one cup of tea. Suppose Alexi has $90/mo to spend
For Alexi, coffee and tea are perfect substitutes: One cup of coffee is equivalent to one cup of tea. Suppose Alexi has $90/mo to spend on these beverages, and coffee costs $0.90/cup while tea costs $1.20/cup. Find Alexi’s best affordable bundle of tea and coffee. How much could the price of a cup of coffee rise without harming her standard of living?
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