1. Frau Blucher has different preferences than Frederick Frankenstein.
Her preferences for Mel Brooks movies and Willy Wonka brand chocolate are described
below. When she consumes:
 Twice as many movies as chocolate (2qc = qm) her MRS (Marginal Rate of Substitution) = -1/2
 An equal amount of each (qc = qm) her MRS = -1�--1-1
 Twice as many chocolates as movies (qc = 2qm) her MRS = -2�-2
 Four times as many chocolates as movies (qc = 4qm) her MRS = -3
�3
a. What do Frau Blucher's preferences look like? Illustrate below with the quantity of
chocolate on the horizontal axis and the quantity of movies on the vertical axis. Make sure
to label your graph.


b. Suppose that the price of a Wonka bar chocolate is $40 and the price of a movie is $20. What is
the opportunity cost of an additional Mel Brooks movie?

c. Suppose that the pattern of preferences (between averages and extremes) extends beyond
the rays presented above. What is the optimal bundle of goods if Frau Blucher's income is
$200?

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