1.Suppose that consumers who live in New England pay twice as much for avocados as for tangerines, whereas those who live in California pay half as much for avocados as for tangerines. Assuming that consumers maximize their utility, which city's consumers have a higher rate of substitution of avocados for tangerines? Explain your answer.

2.There are two regions in the same country, one in the eastern part and the other one lies in the western. Those who live in the eastern part consume twice as much rice per year than those who live in the west. Given that the price of rice does not vary across the country, which part of the country has a larger marginal rate of substitution of rice for all else? Explain your answer.

3.Suppose you have an aunt who always eats 2 biscuits with one cup of tea. She eats biscuits only with tea. A can of biscuits costs $14 and it contains 20 biscuits. A cup of tea costs 60 cents. She reserves $60/month to her teas and biscuits. How many cups of tea will she drink per month?

4.In this problem, we will study how dierent types of promotions aect a consumer's budget constraint.

Suppose that a consumer has $200 to spend per month. Assume that the price of a unit of a household product is $5. For each of the following scenarios, draw the consumer's budget constraint by plotting all else on the y-axis and household products on the x-axis.

(a)For every $100 she spends on household products she gets $10 back which she can spend on anything.

(b)Suppose that once the consumer purchases 10 household products, each additional household product is 50% cheaper.