Suppose that Susan enjoys sugar in her coffee. She has very particular preferences, and she must have exactly four spoonfuls of sugar for each cup of coffee. Let C be the number of cups of coffee, and S be the number of spoonfuls of sugar. Her utility function that represents her preferences can be written as U(C, S) = MIN (4C, S). Also, let PC be the price of a cup of coffee and PS be the price of a spoonful of sugar. Suppose Susan has $24 to spend on Coffee and Sugar (M = $24). Also, the price of a spoonful of Sugar is PS = $.25. Graph Susan's Price Consumption Curve for prices, PC = $1, PC = $2, and PC = $3. Please put the number of cups of coffee (C) on the horizontal axis, and the number of spoonfuls of Sugar (S) on the vertical axis.

Be sure to graph each budget constraint associated with each price of Coffee, identify Susan's optimal bundle on each budget constraint, and make sure your graph is labeled carefully and accuratel.

Answer rating: 100% (QA)

Here is the graph with Susans price consumption curves for different prices of coffee ... View the full answer