# How much of each type of sugar will be purchased? How would your answer change if the price of store-brand sugar was \$2 per pound and the price of producer-brand sugar was \$3 per pound?

It is common for supermarkets to carry both generic (store-label) and brand-name (producer-label) varieties of sugar and other products. Many consumers view these products as perfect substitutes, meaning that consumers are always willing to substitute a constant proportion of the store brand for the producer brand. Consider a consumer who is always willing to substitute four pounds of a generic store-brand sugar for two pounds of a brand-name sugar. Do these preferences exhibit a diminishing marginal rate of substitution between store-brand and producer-brand sugar? Assume that this consumer has \$24 of income to spend on sugar, and the price of store-brand sugar is \$1 per pound and the price of producer-brand sugar is \$3 per pound. How much of each type of sugar will be purchased? How would your answer change if the price of store-brand sugar was \$2 per pound and the price of producer-brand sugar was \$3 per pound?