Harry has ten dollars to spend on cans of Coke and Pepsi, which he regards as pe

Question

Harry has ten dollars to spend on cans of Coke and Pepsi, which he regards as perfect substi-

tutes, one-for-one. Pepsi costs $.50 a can and Coke costs $.60 a can. Harry has 20 coupons, each of

which can be used to buy one can of Coke for 40 cents. Which of the following bundles will Harry

buy? (please explain or show work; i already know the answer, just need to know how to get there)

(a) 20 cans of Pepsi and no Coke.

(b) 16 and two thirds cans of Coke and no Pepsi.

(c) 10 cans of Coke and 8 cans of Pepsi.

(d) 10 cans of Coke and 12 cans of Pepsi.

(e) None of the above.

Explanation / Answer

ans: (d) 10 cans of Coke and 12 cans of Pepsi.

as harry has coupons which can be used for coke to get at price of 40 cents

so he can buy $0.4*10 = $4

and 12 cans of pepsi for $0.5*12 =$6

=> $6+$4 =$10 (which is planned incoime to spend on coke and pepsi)

hence only in this case, he spends his entire planned income

therefore ans: (d) 10 cans of Coke and 12 cans of Pepsi.

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