Scruffie the cat has $15 to spend each month on cat toys, which cost $3 each, and cat treats, which cost $1.50 each. Draw a budget line to show the combinations of each good that Scruffie can afford if she spends her entire budget. Now suppose that cat treats go on sale for $1 each. How does this change in price affect the budget line (describe and show on a graph)?

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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.