Suppose a person's utility is only a function of their consumption of diet soda and they do not care which brand,Diet Coke (DC)or Diet Pepsi (DP)they consume.Suppose further that P_DC P_DP then the consumption of DC A) Falls from a positive amount to zero B) Falls from a positive amount to another positive amount. C) rises. D) stays at zero.

Question

Suppose a person's utility is only a function of their consumption of diet soda and they do not care which brand,Diet Coke (DC)or Diet Pepsi (DP)they consume.Suppose further that P_DC< P_DP.If P_DCrises to a point where P_DC> P_DP then the consumption of DC A) Falls from a positive amount to zero B) Falls from a positive amount to another positive amount. C) rises. D) stays at zero.

Quizplus · Accepted Answer

When the price of Diet Coke (DC) rises above the price of Diet Pepsi (DP), the person will switch their consumption entirely to Diet Pepsi, as they are indifferent between the two brands and will choose the cheaper option.

Suppose a Person's Utility Is Only a Function of Their