Question: Suppose that a consumer i s choosing between one - gallon jugs o f milk and half - gallon jugs o f milk. She only
Suppose that a consumer choosing between onegallon jugs milk and halfgallon
jugs milk. She only cares about how much milk she consumes. Let denote the
number onegallon jugs consumed, and let denote the number halfgallon jugs
consumed.
$ the price a onegallon jug
milk $ and the consumer has $ spend milk. Solve for the consumer's optimal
bundle. Hint: when the halfgallon jugs the onegallon jugs provide better
value for money?
the horizontal axis and
the vertical axis; label the horizontal and vertical intercepts. What the marginal rate
substitution for for this consumer, and what does that mean economically?
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