A consumer has $100 to spend on craft beer and Schweinefleischaft (pork shanks). Suppose craft beer costs $10 per 4-pack if the customer purchases up to five 4-packs. After that, it is $5 per 4-pack. Suppose Schweinefleischaft is $5 per order of pork shanks. (a) Draw the budget constraint for this consumer, with craft beer on the horizontal axis and Schweine- fleischaft on the vertical axis. (b) Will the consumer ever purchase exactly five 4-packs of craft beer? Explain why, using both the graph in part (a) and words.

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Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.