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In: Economics

A. Provide an intuitive explanation for why a "buy one, get one free" deal is not...

A. Provide an intuitive explanation for why a "buy one, get one free" deal is not the same as a "half-price" sale. (L06)  

B. The Einstein Bagel Corp. offers a frequent buyer program whereby a consumer receives a stamp each time she purchases one dozen bagels for $6. After a consumer accrues 10 stamps, she receives one dozen bagels free. This offer is an unlimited offer, valid throughout the year. The manager knows her products are normal goods. Given this information, construct the budget set for a consumer who has $200 to spend on bagels and other goods throughout the year. Does Einstein's frequent buyer program have the same effect on the consumption of its bagels that would occur if it simply lowered the price of one dozen bagels by 3 percent? Explain.

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Rahul Sunny answered 2 years ago
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