4. a. Consider a consumer with preferences defined over x and y. Demonstrate that it is possible they would choose to consume some of both commodities when their income is I but would choose to consume only x when their income is I’ > I. (Remember: if you can draw it without violating any of the basic assumptions on preferences, it could happen.) b. Conversely, demonstrate that it is possible they would choose to consume only x when their income is I but would choose to consume x and y when their income is I’ > I. c. Finally, show it is possible that they would choose to consume only y when their income is I but would choose to consume only x when their income is I’ > I.

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Product and Price Bundling

Product and price bundling is used as a marketing strategy by businesses, where complementary products and services are combined and sold as a package deal. This bundled price is usually less than the total price of the individual products if they were to be sold separately. When bundled and sold, each product is sold at a reduced price. Using a price bundling strategy helps increase the average revenue per user and also increases the engagement with the user. This happens as the perceived value of the bundled products is more than the individual products.