While at a discount shoe store,a customer asked a clerk,"I see that your shoes are 'buy one,get one free-limit one free pair per customer.' Will you sell me one pair for half price?
" The clerk answered,"I can't do that." When the customer started to leave the store,the clerk hastily offered,"However,I am authorized to give you a 40 percent discount on any pair in the store." Assuming the consumer has $200 to spend on shoes (X)or all other goods (Y),and that shoes cost $100 per pair,answer the following questions:
a.Illustrate the consumer's opportunity set with the "buy one,get one free" deal and with a 50 percent discount.
b.Why was the 40 percent discount offered only after the consumer rejected the "buy one,get one free" deal and started to leave the store?
c.Why was the clerk willing to offer a "buy one,get one free" deal,but unwilling to sell a pair of shoes for half price?
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q163: Suppose that three consumers are in the
Q164: Sally Consumer's indifference curve between cigarettes and
Q165: Draw the opportunity set of a consumer
Q166: Over the past decade,medical costs have increased
Q167: Suppose a consumer derives satisfaction from consuming
Q169: A consumer has a choice of spending
Q170: At a very basic level,food and shelter
Q171: If shoes and socks are complements and
Q172: Airlines give away millions of tickets each
Q173: Suppose you are the manager of a
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents