Chapter 2, Problem 2.5P

A

To determine

describe the MRS of coffee for tea, and also about the indifference curves.

B

To determine

the quantity of coffee and tea that can be bought to maximize the utility.

C

To determine

Sketch the indifference map and place the budget constraint proving that the point of utility maximizing occurs on T-axis, where the coffee is not bought.

D

To determine

explain the preference of the person in deciding to buy Coffee.

E

To determine

the change in the consumption pattern, for an assumed fall in the price of Coffee to $2.