Sam€™s utility function over iced coffee, C, and tacos, T, isU=min(C, T), where min denotes the minimum value. For example, ifC = 2 andT = 3, U = min (2, 3) = 2.Sam spends his entire budget of $12 on coffee and tacos.

a. Which of the panels in Figure 4.4 has indifference curves with the same shape as Sam€™s indifference curves over iced coffee and tacos? Explain.

b. In Sam€™s favorite restaurant, Taco Corner, the price of iced coffee is $2 per cup, and the price of a taco is $1. Using Excel create a column titled C and enter the values 1, 2, . . . , 6. Those numbers represent different possible numbers of cups of iced coffee Sam might purchase. For each of those values calculate the number of tacos that Sam can buy if he spends the rest of his $12 budget on tacos. Calculate the resulting utility level for each consumption bundle and determine the combination of iced coffee and tacos that maximizes Sam€™s utility.

c. Taco Corner reduces the price of iced coffee to $1.50 and raises the price of tacos to $1.50. Using Excel, re-do the calculations in part b and determine Sam€™s utility-maximizing consumption bundle now.

Figure 4.4

(a) Perfect Substitutes (b) Perfect Complements (c) Imperfect Substitutes 12 13 2 3 4 2 3 Z, Pizzas per semester Pepsi, Cans per week Pie, Slices per week Coke, Cans per week 2. Ice cream, Scoops per week 2. B, Burritos per semester a