Ashley has a brother named ‘Nathan’ who runs alocal restaurant, therefore he purchases both Cases of Coca-Cola as well asCases of Pepsi, in which are supplies for his restaurant.
Nathan perceives twogoods as complementary as Good X would withhold little to no value whenconsumed alone, however when combined with good Y, would increase overall valueof the offering. In Figure 3,we can see that the elbows are collinear, and the budget constraint crossingthem expresses the proportion, which each good needs to increase so that there isan increase in the utility. Figure 3 therefore shows Nathans bestbundle, which will give him maximum utility. Nathan has an income of £50 aweek, the optimal point of utility is illustrated on the Figure 3, where thehighest point the indifference curve is interchanged with the budget constraint.At that point, he will have 6 units of ‘Cases of Coca-Cola’ and 6 units of’Cases of Pepsi’, this shall thereby use £45 of his budget, with a remainder of£5.
There is a remainder of money due to the fact that both goods arenon-separable, meaning he cannot purchase all bundles of goods that willmaximise his budget. It is important to add that, the 20% discount will not beapplied to the Cases of Pepsi due to the goods being perfectly complimentary. In conclusion, a consumer acting upona rational basis would be enticed by the 20% discount offered on ‘Cases ofPepsi’. This is understandable as a rational consumer’s objective will be tomaximise their utility. These offers also aid companies in increasing theirshare in the market and hence their profits because consumers will be moreinclined to purchase Pepsi brand soda, rather than substitute companies sellingthe same product at the full price. However, the only issue with this theory isthat not all consumers act with ration in reality, thereby a discount couldlead to a price inelasticity of demand, resulting in the offer being a failureto the company.