• Consider the consumer budget set given as: 600 23X+6Y - . Illustrate the budget set in diagram. • What happens to the budget set if prices of both goods double and income also doubles? • What happens to the budget set if price of X doubles? [Show in diagram] What happens if price of Y doubles? [Show in diagram] e • What happens if consumer income decreases by 25%? [Show in diagram]

• Consider the consumer budget set given as: 600 23X+6Y - . Illustrate the budget set in diagram. • What happens to the budget set if prices of both goods double and income also doubles? • What happens to the budget set if price of X doubles? [Show in diagram] What happens if price of Y doubles? [Show in diagram] e • What happens if consumer income decreases by 25%? [Show in diagram]

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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.

Question

• Consider the consumer budget set given as:
600 23X+6Y -
• Illustrate the budget set in diagram.
• What happens to the budget set if prices of both goods double
and income also doubles?
• What happens to the budget set if price of X doubles? [Show
in diagram]
What happens if price of Y doubles? [Show in diagram]
• What happens if consumer income decreases by 25%? [Show
in diagram]

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Step 1: Budget set

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Step 2: Illustration of the budget set

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Step 3: If prices of both good double and income doubles

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Step 4: If price of x doubles

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Step 5: If price of y double

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Step 6: If consumer income decreases by 25%

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