LaToya sees honey and sugar as perfect substitutes. She is always willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar. If the price of honey is half that of sugar, LaToya will use:
A) only honey.
B) only sugar.
C) a lot of honey and a little sugar.
D) a lot of sugar and a little honey.

Question

Quizplus · Accepted Answer

Since the price of honey is half that of sugar and LaToya is willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar, she will choose to use only honey as it is cheaper and provides the same utility.

LaToya Sees Honey and Sugar as Perfect Substitutes