A consumers cares only about the total amount of beer he drinks. Therefore he considers two 12-ounce cans of beer to be as good as one 24-ounce bottle. Suppose these are the only two goods available to this consumer. The price of a 12-ounce can is $1.00, while the price of a 24-ounce bottle is $3.00 due to higher packaging costs.

a)Write down his budget constraint and a utility function that captures his preferences. Draw his budget constraint and three of his indifference curves.

b)What is his optimal consumption bundle? Explain your reasoning.

c)Fixing the price of a 24-ounce beer at $3.00, what must we make the price of a 12-ounce beer to have the consumer purchase both goods?

d)At the price you determine in c) what is the best choice? Explain.