At a shoe store, a customer asked the store manager, \"I see that your shoes are

Question

At a shoe store, a customer asked the store manager, "I see that your shoes are 'buy one, get one free limit one free pair per customer.' Will you sell me one pair for half-price?" The manager answered. "I can't do that." When the customer started to leave the store, the manager (who took economies 325 while in college) hastily offered, "However, I am authorized to give you a 40 percent discount on any pair in the store." Assuming the consumer has $200 to spend on shoes (X) or all other goods (Y), and that shoes cost $100 per pair, answer the following questions Graph the consumer's budget constraint with the "buy one, get one free" deal and with a 40 percent discount. Why was the 40 percent discount offered only after the consumer rejected the "buy one, get one free" deal and started to leave the store? Why was the manager willing to offer a "buy one, get one free" deal, but unwilling to sell a pair of shoes for half-price?.

Explanation / Answer

50 % discount cant be given because if price is 100 and profit is 60 hence 40 is price to shpkepper and in buy one get one he 100 for two shoes and 80 is cost hence 20 is profit.. hence profit is more in buy one get one than flat 50% off .....

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