Huang is determining how much Coke and Pepsi he will buy. Use the information in italics to answer the bolded question below. Huang's preferences for Coke (C) and Pepsi (P) are represented by the following utility function: ● ● Huang has $12 to spend on soft drinks. • The price of Coke (P) is $0.50/can. • The price of Pepsi (Pp) is $1.00/can. Which of the following statements referring to Huang's preferences is incorrect. U = 2C + 3P Huang does NOT experience diminishing MRS. If Huang gives up two cans of Pepsi, he needs to purchase 3 cans of Coke to remain equally satisfied. Pepsi and Coke are perfect substitutes for Huang None of the above statements are incorrect.

Huang is determining how much Coke and Pepsi he will buy. Use the information in italics to answer the bolded question below. Huang's preferences for Coke (C) and Pepsi (P) are represented by the following utility function: ● ● Huang has $12 to spend on soft drinks. • The price of Coke (P) is $0.50/can. • The price of Pepsi (Pp) is $1.00/can. Which of the following statements referring to Huang's preferences is incorrect. U = 2C + 3P Huang does NOT experience diminishing MRS. If Huang gives up two cans of Pepsi, he needs to purchase 3 cans of Coke to remain equally satisfied. Pepsi and Coke are perfect substitutes for Huang None of the above statements are incorrect.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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