eco204_HW_9 -...

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University of Toronto, Department of Economics, ECO 204 2008 2009 S. Ajaz Hussain ECO 204 2008 2009 Ajaz Hussain HW 9 Question 1 In the 1970s, Coca Cola (the number 1 global brand) used sugar in its secret formula. Rising sugar prices and changing consumer tastes away from high calorie drinks to low calorie drinks, forced Coca Cola to tinker with its formula. In particular, Coca Cola considered switching from sugar to corn fructose syrup. In all questions, put fructose on the x axis and sugar on the y axis. (a) Coca Cola initially could not develop a new formula for Coke that used fructose as an input while maintaining the “taste” of Coke. What do Coke’s iso quants look like? How much of sugar and fructose will Coke use in its products? (b) Coca Cola figured out a way to mix sugar and fructose and maintain Coke’s taste but had to still use some sugar. What did Coke’s iso quants look like? Hint: there is more than one answer. Also, at this time, Coke used a 50
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This note was uploaded on 05/02/2011 for the course ECO 204 taught by Professor Hussein during the Fall '08 term at University of Toronto- Toronto.

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eco204_HW_9 -...

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