1. Consider a household that has $300 to spend on back-to- school shoes. They visit one...
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1. Consider a household that has $300 to spend on back-to- school shoes. They visit one of the discount shoe stores where shoes are buy one pair for $50, get the second half off. a. Draw the budget constraint that this family faces. Be sure to label axes and use numbers where possible. b. Add three dots to show three different consumption bundles, A, B, and C. c. Under what conditions might a household choose each of these bundles? d. Would it ever be rational for someone to purchase an odd pair of shoes? 1. Consider a household that has $300 to spend on back-to- school shoes. They visit one of the discount shoe stores where shoes are buy one pair for $50, get the second half off. a. Draw the budget constraint that this family faces. Be sure to label axes and use numbers where possible. b. Add three dots to show three different consumption bundles, A, B, and C. c. Under what conditions might a household choose each of these bundles? d. Would it ever be rational for someone to purchase an odd pair of shoes?
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a The budget constraint for the family can be represented graphically as a straight line showing the ... View the full answer
Related Book For
Managerial Economics and Strategy
ISBN: 978-0321566447
1st edition
Authors: Jeffrey M. Perloff, James A. Brander
Posted Date:
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