Managerial Economics Assignment
Problem 1 - You enjoy satisfaction from consuming sandwiches. Suppose there are two types of sandwiches, X and Y.
1) Graph your budget line if you are offered a "buy two, get one free (limit one free sandwich)" deal for X.
2) Graph your budget line if you are offered a "buy two, get one free (limit one free sandwich)" deal for Y.
Problem 2 - Suppose you are in equilibrium at point A in Figure I. Let's assume that the price of good X is PX = $5.
1) What is the price of good Y?
2) What is your income?
3) How many units of good Y do you purchase at point A?
4) If the budget line changes and you achieve a new equilibrium at point B, what change in the economic environment led to this new equilibrium? Are you better off or worse off? Why?
