12. (20 points) Javier loves snacks and spends $100/week on them (so IS100 for t

Question

12. (20 points) Javier loves snacks and spends $100/week on them (so IS100 for this problem) Candy costs $10/pound and nuts cost $10/pound, and Javier can buy fractions of pounds if he wants. Here's the great news for Javier: the candy store has a deal where if he buys 4 pounds of candy, he gets his next pound for free! The nut store doesn't have any such deal. Which of the following captures Javier's budget constraint over candy and nuts? Xy (2, 10) (0, 10) (0, 10) (12,0) (12, 0) (0, 10) (0, 10) (5, 6) (4, 6) (10, 2) (9, 2) (10, 2) (8, 2) (12, 0) (12, 0)

Explanation / Answer

Graph (C).

For every 4 pounds of candy, the next 1 pound of candy is free. So when he buys 4 pounds of candy, he gets 5 pounds & when he buys 9 pounds of candy, he gets 10 pounds (a step function).

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