Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / arah has a weekly income of I = $100 to rent video games (good x) and to purchase a compos...

arah has a weekly income of I = $100 to rent video games (good x) and to purchase a composite good (good y). The price of the composite good is py= $1, regardless of how many units he buys, while that

arah has a weekly income of I = $100 to rent video games (good x) and to purchase a composite good (good y). The price of the composite good is py= $1, regardless of how many units he buys, while that of games is px= $4. a) Find the equation of Sarah's budget line. b) Suppose the video game store offers the following discount, a price of px= $4 for the first six units and px'= $2 for the seventh unit and beyond. Find the equation of the new budget line. c) Connect the budget line from parts (a) and (b) to show the kinked budget line with quantity discount. Describe how Sarah's consumption of video games and the composite good changes with the price discount.

Apr 15 2021 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions