Question

What do the budget lines for a voucher for Good Y and "buy one unit of...

What do the budget lines for a voucher for Good Y and "buy one unit of Good Y get the next unit of Good Y free” have in common? Select one:
a. One or more portions of the budget constraint that is a vertical line
b. Budget constraints that are convex to the origin.
c. L-shaped budget constraints.
d. One or more portions portion of the budget constraint that is a honzontal line.

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Answer #1

Option A is correct

When you are given a voucher for good Y it implies that you can use the budget on good X without reducing the quantity of good Y. The budget line will then start from vertical intercept, which will be downward sloping fill the voucher becomes available and then it becomes vertical.. buy one get one scheme makes stepwise budget constraint because for one unit purchased another becomes free. This also contains vertical portion of budget constraint.

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