Suppose the Only Characteristic of Beer That a Consumer Cares

question 2

Essay

Suppose the only characteristic of beer that a consumer cares about is alcohol content.Currently, Bud Light and Miller Lite both have the same alcohol content.
a.Illustrate the consumer's indifference curves in a graph with ounces of Miller Lite on the horizontal and ounces of Bud Light on the vertical axis.
b.Suppose that the producers of Bud Light lower the price of Bud Light.How will your answer to (a) change?
c.Suppose that the producers of Bud Light lower the alcohol content of their beer by 50%.How will your answer to (a) change?
d.Since we identify tastes with indifference maps, would you say that the consumer's tastes have changed in (b) or (c)?
e.How could we change the units we use to measure Miller Lite in order to get the indifference map in (c) to again look like the one in (a)?

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Definitions:

Socio-Economic

Relating to or concerned with the interaction of social and economic factors.

CSR

Corporate Social Responsibility, a business model in which companies integrate social and environmental concerns in their operations and interactions with their stakeholders.

Broader Welfare

A concept referring to the general health, happiness, and well-being of a population or community.

Virtuous Circle

What occurs when socially responsible behaviour improves financial performance, which leads to more responsible behaviour in the future.