Question
The Einstein Bagel Corp. offers a frequent buyer program whereby a consumer receives a stamp each time she purchases one dozen bagels for $6. After
The Einstein Bagel Corp. offers a frequent buyer program whereby a consumer
receives a stamp each time she purchases one dozen bagels for $6.
After a consumer accrues 10 stamps, she receives one dozen bagels free. This
offer is an unlimited offer, valid throughout the year. The manager knows her
products are normal goods. Given this information, construct the budget set
for a consumer who has $200 to spend on bagels and other goods throughout
the year. Does Einstein's frequent buyer program have the same effect on the
consumption of its bagels that would occur if it simply lowered the price of
one dozen bagels by 3 percent? Explain
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