Business, 24.12.2019 07:31, paulat

In order to encourage energy conservation, many public 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, px = $2 if the consumer buys less than 40 units of x, px = $3 if the consumer buys more than 40 units of x, and py = $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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In order to encourage energy conservation, many public utility companies charge consumers a higher r...