Question
Robert treats coffee and creamer as perfect complements and has very specific requirements for the ratio of creamer to coffee. He will drink coffee only
Robert treats coffee and creamer as perfect complements and has very specific requirements for the ratio of creamer to coffee. He will drink coffee only if he has exactly4.00packets of creamer for every cup of coffee. Coffee is priced at $3.00 per cup and creamer at $0.25 per packet. In the questions below, give your answers to two decimal places.
Suppose that Robert has $48.00to spend on coffee and creamer. His optimal consumption bundle contains cups of coffee and packets of creamer.
Now, suppose that the price of creamer rises to $0.50 per packet. What is the absolute value of the change in creamer packet consumptions associated with the substitution effect of this price change? packets.
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