An individual has $50 to spend, and can buy a maximum of 45 litres of gas or
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Question:
An individual has $50 to spend, and can buy a maximum of 45 litres of gas or 35 bottles of beer. |
a. Sketch the budget constraint and choice set. b. What are the prices of gas and beer? c. Instead, given the same prices as above, suppose anyone buying gas receives a 10% discount for all purchases over 20 litres. How many bottles of beer can a person buying 20 litres of gas purchase? How much gas can |
someone buying no beer purchase? Sketch this budget line with the discount. |
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