Mario sees popcorn and pretzels as perfect substitutes. He is always willing to substitute 3 cups of popcorn for 1 cup of pretzels. If Mario consumes only popcorn, then we know that the relative price of popcorn in terms of pretzels is:

Question

Quizplus · Accepted Answer

Mario is willing to substitute 3 cups of popcorn for 1 cup of pretzels, indicating that the relative price of popcorn in terms of pretzels is 1/3 or 0.33. If he consumes only popcorn, the price must be less than 0.33.

Mario Sees Popcorn and Pretzels as Perfect Substitutes