LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If honey is twice as expensive as sugar, LaToya will:
A) use only honey.
B) use only sugar.
C) use a lot of honey and a little sugar.
D) be willing to purchase either sugar or honey.

Question

Quizplus · Accepted Answer

LaToya will be willing to purchase either sugar or honey because the price of honey is twice that of sugar, and she is willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. This means that the cost of 1 teaspoon of honey is equal to the cost of 2 teaspoons of sugar. Therefore, LaToya will be indifferent between purchasing honey or sugar.

LaToya Sees Honey and Sugar as Perfect Substitutes