Answered: Why does local non-satiation of…

Why does local non-satiation of preferences imply that a consumer would always choose a bundle on the boundary of the Walrasian budget set? Explain.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 6P

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Concept explainers

Product and Price Bundling

Product and price bundling is used as a marketing strategy by businesses, where complementary products and services are combined and sold as a package deal. This bundled price is usually less than the total price of the individual products if they were to be sold separately. When bundled and sold, each product is sold at a reduced price. Using a price bundling strategy helps increase the average revenue per user and also increases the engagement with the user. This happens as the perceived value of the bundled products is more than the individual products.

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Why does local non-satiation of preferences imply
that a consumer would always choose a bundle on
the boundary of the Walrasian budget set? Explain.

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