What is the marginal rate of substitution between a and b

Reference no: EM13236135

Susie is at the grocery store buying milk. She has a choice between milk from Dairy A or milk from Dairy B. She doesn't actually care at all which dairy her milk comes from.

(a) Draw a possible indifference curve for Susie between milks A and B.

(b) What is the marginal rate of substitution between A & B?

(c) Suppose milk A costs $2 per gallon and milk B costs $1 per gallon. Susie has $10. Draw her budget constraint on the same graph you drew above and label each intercept.

(d) How much of milk A and how much of milk B will Susie buy if she maximizes her utility? Explain.

Reference no: EM13236135

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