Question
In order to encourage energy conservation, many pubic utility companies charge consumers a higher rate on units of electricity consumed in excess of some threshold
In order to encourage energy conservation, many pubic utility companies charge consumers a higher rate on units of electricity consumed in excess of some threshold amount. In contrast, a common marketing ploy by other firms is to offer "quantity discounts" to consumers who purchase large quantities of a good. To illustrate how these pricing schemes alter the typical consumer's opportunity set, suppose income = $100, P x = $2 if the consumer buys less than 40 units of P x = $3 if the consumer buys more than 40 units of X, and P y = $5. Draw the budget constraint. How would the budget constraint change if the price decreased to $1 after 40 units of X were consumed?
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Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
6th edition
978-0077328894, 71313974, 9780077395810, 77328892, 9780071313971, 77395816, 978-0077400163
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