Shirley thinks that two 8-ounce cans of soda are exactly as good as one 16-ounce can of soda. Suppose that these are the only sizes of soda available to her and that she has $30 to spend on soda. Suppose that an 8-ounce can of soda costs $.75 and a 16-ounce can of soda costs $1.
a) Graph Shirley's budget line and then, using dotted lines, draw some indierence curves.
b) At these prices, how much of each kind of can does Shirley buy?
c) Suppose that the price of 8-ounce sodas falls to $.55. How much of each does Shirley buy then?
d) What if the price of 8-ounce sodas falls to $.40?
e) Write down Shirley's demand functions for general prices and income p8,p16, and m