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Write down the budget equation

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With some services, a consumer is offered a choice of two or more payment plans. One can either pay a high entry fee and get a low price per unit of service or pay a low entry fee and a high price per unit of service. Suppose you have an income of $200. There are two plans. Plan A has an entry fee of $50 with a price of $2.50 per unit. Plan B has an entry fee of $100 with a price of $1 per unit for using the service. Let x be consumption of the service, and y represent AOG (All other goods). The price of AOG is $1/unit.

Write down the budget equation that you would have after you paid the entry fee for each of the two plans.

Reference no: EM132648814

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