Johnny has allocated 30 toward coffee and tea and feels that ...

[iveyjurea]

Johnny has allocated 30 toward coffee and tea and feels that coffee and tea are perfect substitutes. Due to differences in caffeine levels, his MRS of tea for coffee equals 2. If coffee and tea sell for the same price, Johnny will
 
  A) spend all 30 on tea.
  B) spend all 30 on coffee.
  C) spend 20 on coffee and 10 on tea.
  D) be indifferent between any bundle of coffee and tea costing 30.

Question 2

With respect to consuming food and shelter, two consumers face the same prices and both claim to be in equilibrium. We therefore know that
 
  A) they both have the same marginal utility for food.
  B) they both have the same marginal utility for shelter.
  C) they both have the same MRS of food for shelter.
  D) All of the above.

[Jadwiga9]

Answer to Question 1

B

Answer to Question 2

C