Max consumes coffee and sugar in the fixed proportion of 3 packs of coffee to 2 packs of sugar. A pack of coffee costs $10, and a pack of sugar costs $10. Max has income of $200. a. Max chooses 10 packs of coffee cross out b. Max chooses 10 packs of sugar cross out c. Coffee and sugar to Max are perfect substitutes cross out d. Max chooses 12 packs of cream cross out e. None of the other statements are correct
Marginal Rate of Technical Substitution
MRTS reaches a manufacturer when a part of the product is lowered to sustain the manufacturing level when the other part is extended. It is the level of the quantity that is lowered when one extra volume is used, and the output is unchanged.
Preferences and Utility Analysis
Before understanding what is preference and utility analysis, it is very important to understand the terms preference and utility separately.
Max consumes coffee and sugar in the fixed proportion of 3 packs of coffee to 2 packs of sugar. A pack of coffee costs $10, and a pack of sugar costs $10. Max has income of $200.
Max chooses 10 packs of coffee
Max chooses 10 packs of sugar
Coffee and sugar to Max are perfect substitutes
Max chooses 12 packs of cream
None of the other statements are correct
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