An individual has $84 to spend, and can buy a maximum of 60 litres of gas or 70 bottle of beer.
a. Sketch the budget constraint and choice set.
b. What are the prices of gas and beer?
c. Suppose anyone buying more than 40 litres of gas receive a 10% discount. How many bottles of beer can a person buying 40 litres of gas purchase? How much gas can someone buying no beer purchase? Sketch this budget line with the discount.
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