Alice runs a cupcake business she uses lots of caster sugar, Ask an Expert

Economics

Alice runs a cupcake business. She uses lots of caster sugar in her baking (a very fine sugar). Alice also owns a thermomix, thus regular white sugar is a perfect substitute for caster sugar. However, regular sugar comes in 2kg bags, while caster sugar comes in 1kg bags.

(a) Write the utility function for Alice for sugar (S) and caster sugar (C).

(b) If the price of a bag of sugar is $4 and caster sugar is $2.50 and Alice has $100 budget to spend on sugar, how much of each type of sugar will Alice purchase. Explain and graph.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91835819

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