Final answer:
Latoya considers honey and sugar as perfect substitutes but because honey is three times as expensive as sugar, she would choose to use only sugar to maximize her utility while being cost-effective.
Step-by-step explanation:
When considering Latoya's perception of honey and sugar as perfect substitutes, where she is willing to substitute 1 teaspoon of honey for 2 teaspoons of sugar, her decision is affected by the economic concept of relative price and utility maximization. Given that honey is three times as expensive as sugar, Latoya's choice will be to use only sugar. This is because, for the same amount of sweetness, using honey is less cost-effective compared to using sugar. If the total volume of solutions in two cups is the same, and one cup contains more sugar than the other, the cup with less sugar contains more water, illustrating the displacement effect of a solute in a solution.
Relative sweetness is an important consideration here too. Since honey has a sweetness comparable to that of table sugar (sucrose) and is more expensive, an economically rational consumer like Latoya would opt for the cheaper alternative to maximize her utility within her budget constraints. Economic models assume that consumers make choices to get the most value out of their resources, in this case, opting for the sweetener that provides the desired sweetness at the lowest cost.