Sabine can't tell the difference between Coke and Pepsi-the two taste exactly the same to her. a.
Question:
a. What is Sabine's marginal rate of substitution of Coke in place of Pepsi?
b. Draw a few of Sabine's indifference curves for Coke and Pepsi. Place Coke on the horizontal axis and Pepsi on the vertical axis.
c. Sabine has $6 to spend on cola this week. Coke costs $1.50 per six - pack and Pepsi costs $1.00. Draw Sabine's budget line for Coke and Pepsi on the same diagram.
d. What is Sabine's optimal consumption bundle? Show this on your diagram.
e. If the price of Coke and Pepsi is the same, what combination of Coke and Pepsi will Sabine buy?
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a If Sabine cant tell the difference between Coke and Pepsi the two are perfect substitutes for her ...View the full answer
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