1. Bob only consumes orange juice and apple juice.

Bob views
orange juice and apple juice as perfect substitutes: He is always
indifferent between a glass of one and a glass of the other.

a. How does Bobs indifference map look like?

b. What is the utility function of Bob in terms of orange juice

and apple juice?

c. Suppose the price of apple juice is Rs 15 and price of

orange juice is Rs 20. What is the consumption of apple
and orange juices for Bob, if the total income is given as
`m?

d. Suppose the price of apple juice is Rs 30 and price of

orange juice is Rs 20. What is the consumption of apple
and orange juices for Bob, if the total income is given as Rs
300?
a. Straight lines such that glasses of apple juice consumed +
glasses of orange juice = constant.

b. Utility function = glasses of apple juice consumed + glasses

of orange juice.

c. Since apple juice is cheaper, consumption will be totally apple

juices. Therefore, apple juices consumed = m/15. Orange juices
consumed = 0.

d. Since orange juice is cheaper, consumption will be totally

orange juices. Therefore, apple juices consumed = 0. Orange
juices consumed = 300/20 = 15.