Suppose Alex has income of $100 per month. He only consumes pizza and cell phone minutes. Illustrate Alex's budget constraint under each of the following conditions. a. Pizzas cost $10 each and cell phone service cost $0.10 per minute. b. Alex's service provider offers a quantity discount. After the first 600 minutes, the price per minute drops to $0.05. c. Alex's parents decide that he is not allowed to use more than 600 minutes of cell time per month. d. Under Alex's parents dictate, does he ever consume less than 4 pizzas? How do you know? e. Is it possible that without the mandate from his parents but with the discount phone plan available that Alex would ever consume less than 600 minutes of cell time per month? If so, why and if not why not?
Suppose Alex has income of $100 per month. He only consumes pizza and cell phone minutes. Illustrate Alex's budget constraint under each of the following conditions. a. Pizzas cost $10 each and cell phone service cost $0.10 per minute. b. Alex's service provider offers a quantity discount. After the first 600 minutes, the price per minute drops to $0.05. c. Alex's parents decide that he is not allowed to use more than 600 minutes of cell time per month. d. Under Alex's parents dictate, does he ever consume less than 4 pizzas? How do you know? e. Is it possible that without the mandate from his parents but with the discount phone plan available that Alex would ever consume less than 600 minutes of cell time per month? If so, why and if not why not?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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