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Bob goes to the market to buy milk and cereal. he has $20 to spend. a consumption bundle consists of a quantity of milk, x (liters), and a quantity of cereal, y (grams.) Assume non-negative quantities.

The price of milk at the supermarket is px = 4$/liter. The price of cereal py is 0.2cents/gram. If supermarket allows Bob to use an unlimited number of coupons. Coupon: "Buy 1 liter of milk and get 1 box of cereal for free". A box of cereal has 2000 grams of cereal in it. What does his budget set look like?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9479962

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