How to depict the color-blind customers new budget line

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Reference no: EM13236130

Suppose that a color-blind consumer, has $80 to spend on either pink or lime-green sweaters. He does not care what color he weards but deems it very important to buy as many sweaters as possible with $80. Pink sweaters cost $40 each and lime- green ones cost $20 each.

a) Draw hisbudget line and indifference map. What is his optimal consumption choice?

b) A sale on pink sweaters begins: if a cunsumer buys two pink sweaters at the regular price, he or she can get two additonal pink sweaters free. Two pink sweaters must be purchased to get the deal. Otherwise prices are unchanged. With the sale, depict the color-blind customers new budget line and preferred consumption point.

Reference no: EM13236130

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