The local CVS sells two brands of laundry detergent: MystTM and BreezTM. Myst and Breez use the exact same formula to make their detergent, and are sold in very similar packaging. The only difference between Myst and Breez is that Myst is sold in 16 oz packages, while Breez is sold in 32 oz packages. Dennis (a local CVS shopper) is indifferent between Myst and Breez, and cares only about how much detergent he gets. Thus, his preferences over Myst (M) and Breeze (B) can be represented by: u(M,B) = 16M + 32B Suppose that the price of a bottle of Breez is $10, and the price of Myst is PM. Dennis has a budget of $30. Let's try to determine Dennis's demand curve for Myst as a function of its price, PM: a. Suppose PM = $2. How many containers of Myst will Dennis purchase? b. Now suppose PM = $6. How many containers of Myst will Dennis purchase now? c. What is the highest value of PM at which Dennis might purchase any Myst? At this price, give the full range of optimal quantities of Myst which Dennis could purchase.

The local CVS sells two brands of laundry detergent: MystTM and BreezTM. Myst and Breez use the exact same formula to make their detergent, and are sold in very similar packaging. The only difference between Myst and Breez is that Myst is sold in 16 oz packages, while Breez is sold in 32 oz packages. Dennis (a local CVS shopper) is indifferent between Myst and Breez, and cares only about how much detergent he gets. Thus, his preferences over Myst (M) and Breeze (B) can be represented by: u(M,B) = 16M + 32B Suppose that the price of a bottle of Breez is $10, and the price of Myst is PM. Dennis has a budget of $30. Let's try to determine Dennis's demand curve for Myst as a function of its price, PM: a. Suppose PM = $2. How many containers of Myst will Dennis purchase? b. Now suppose PM = $6. How many containers of Myst will Dennis purchase now? c. What is the highest value of PM at which Dennis might purchase any Myst? At this price, give the full range of optimal quantities of Myst which Dennis could purchase.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.15P

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