The table below represents Sue's preferences for bottled water and soft drinks, the combination of which yields the same level of utility. Marginal Rate of Substitution of Soft Drinks for Bottled Water Combination of Bottled Water and Soft Drinks A B E Bottled Water per month 5 10 15 20 25 Soft Drinks per month 11 7 4 2 1 0.80 0.60 0.40 0.20 Sue's monthly budget for bottled water and soft drinks is $20.00. The price of bottled water is $0.80 per bottle, and the price of soft drinks is $2.00 per bottle. If water is on the horizontal axis and soft drinks are on the vertical axis, the slope of Sue's budget constraint is 0.40. (Enter your response rounded to two decimal places and include a minus sign if necessary.) Given the information on Sue's budget constraint and her preferences, the combination of goods that satisfies her utility-maximizing problem is D
The table below represents Sue's preferences for bottled water and soft drinks, the combination of which yields the same level of utility. Marginal Rate of Substitution of Soft Drinks for Bottled Water Combination of Bottled Water and Soft Drinks A B E Bottled Water per month 5 10 15 20 25 Soft Drinks per month 11 7 4 2 1 0.80 0.60 0.40 0.20 Sue's monthly budget for bottled water and soft drinks is $20.00. The price of bottled water is $0.80 per bottle, and the price of soft drinks is $2.00 per bottle. If water is on the horizontal axis and soft drinks are on the vertical axis, the slope of Sue's budget constraint is 0.40. (Enter your response rounded to two decimal places and include a minus sign if necessary.) Given the information on Sue's budget constraint and her preferences, the combination of goods that satisfies her utility-maximizing problem is D
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The table below represents Sue's preferences for bottled water and soft drinks, the combination of which yields the same level of utility.
Marginal Rate of
Substitution of Soft Drinks
for Bottled Water
Combination of
Bottled Water
and Soft Drinks
A
B
E
Bottled
Water
per month
5
10
15
20
25
Soft
Drinks
per month
11
7
4
2
1
0.80
0.60
0.40
0.20
Sue's monthly budget for bottled water and soft drinks is $20.00. The price of bottled water is $0.80 per bottle, and the price of soft drinks is $2.00 per bottle.
If water is on the horizontal axis and soft drinks are on the vertical axis, the slope of Sue's budget constraint is 0.40. (Enter your response rounded to two
decimal places and include a minus sign if necessary.)
Given the information on Sue's budget constraint and her preferences, the combination of goods that satisfies her utility-maximizing problem is D
Expert Solution
Step 1
Budget constraints shows the relationship between the two goods , their prices and the income of consumer.
Budget constraints is shown as :-
XPx + YPy = M
X and Y are quantities of two goods.
Px and Py are their prices.
M is the income of consumer.
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