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Question

Suppose that a consumer has $200 to spend per month. Assume that the price of a unit of a household product is $5.

For each of the following scenarios, draw the consumer's budget constraint by plotting all else on the y-axis and household products on the x-axis.


(a) For every $100 she spends on household products she gets $10 back which she can spend on anything.

(b) Suppose that once the consumer purchases 10 household products, each additional household product is 50% cheaper.

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Hey there, The attempt... View the full answer

cash back for 100 .png

(a) Budget Line Given the information that : consumer budget = $200 per month price of a unit ofa household product = 55
Let’s consider all other things = Y Price of all other things = BM...

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