One of Matt 's favourite brands is offering a deal on its hoodedjacket...

One of Matt's favourite brands is offering a deal on itsâ€™ hooded jackets, which is sold...

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Economics

One of Matt's favourite brands is offering a deal on itsâ€™ hoodedjackets, which is sold at $100 a piece. The promotion claims thatyou can â€œget the second piece 50% off.â€ It means, if Matt buys ajacket for $100, he can buy the second jacket (of different colour)for 50% of the original tag price, $50. In addition, if Matt wantsa third jacket, he has to pay $100 again, but now he has theprivilege to purchase the fourth jacket for $50, etc. Assume theprice for Other goods is $50 and Matt has an income of $1,000 tospend on both the jackets and Other goods.â€
Draw Matt's budget constraint with jackets on the horizontalaxis.

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4.2 Ratings (598 Votes)

The total income of Matt is 1000The price of other goods is 50If Matt spends all his income onother goods then he can purchase a maximum of 100050 20 unitsof other goodsMatt makes the purchase of hoodedjackets as wellThe See Answer

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