Suppose that a consumer considers coffee and tea to be perfect substitutes, but he requires two cups of tea to give up one cup of coffee. This consumer's budget constraint can be written as $3 C$ $+ T = 10$. What should the consumer buy?

Question

Quizplus · Accepted Answer

Given the consumer views coffee and tea as perfect substitutes but needs two cups of tea for one cup of coffee, the budget constraint $3C + T = 10$ suggests maximizing the quantity of the preferred drink. Since no prices are given, we assume equal prices, and the consumer would prefer to maximize the quantity of tea (as 2 cups of tea equal 1 cup of coffee in utility). Thus, buying 10 cups of tea utilizes the budget fully without needing coffee for maximum utility.

Suppose That a Consumer Considers Coffee and Tea to Be 3C3 C3C

Suppose That a Consumer Considers Coffee and Tea to Be $3 C$