Unlimited amount of muffins at no additional cost

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Reference no: EM131194495

A muffin stand lets consumers choose among a menu of three pricing options: (a) a monthly subscription fee of $200 and a price per muffin of $4; (b) a monthly subscription fee of $300 and a price per muffin of $3; or (c) a monthly subscription fee of $900 and allows for unlimited amount of muffins at no additional cost.

i. Draw the expenditures a consumer would incur under these three two part tariffs.

ii. Over what range of muffin consumption would the consumers choose option a?

iii. Over what range of muffin consumption would the consumers choose option b?

iv. Over what range of muffin consumption would the consumers choose option c?

Reference no: EM131194495

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