Dave consumes only two goods, coffee and doughnuts. When the price of coffee falls, he buys the

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Dave consumes only two goods, coffee and doughnuts. When the price of coffee falls, he buys the same amount of coffee and more doughnuts.
a) On an optimal choice diagram (with budget lines and indifference curves), illustrate this pattern of consumption.
b) Is this purchasing behavior consistent with a quasi-linear utility function? Explain.
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Microeconomics

ISBN: 978-0073375854

2nd edition

Authors: Douglas Bernheim, Michael Whinston

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