Question

A German restaurant desires to increase their business, so it offered a sale where you can buy one hamburger at full price and get the next three hamburgers for $5 each. The full price of hamburgers is $10. Assume that an individual's income is $40 per day and the price of all other goods to purchase is $1 each.

A. Sketch a budget constraint to represent the situation before the sale. Then sketch another budget constraint on the same graph to represent the situation during the sale. Label hamburgers on the horizontal axis and other goods on the vertical axis.

B. How is the sale offer affect consumption decisions?

Thank you for your time in helping me with this problem.

Answer 1