Question: a consumer has a 1800 budget for entertainment which she...
A consumer has a $1,800 budget for entertainment, which she splits between going to concerts and seeing movies at the ArcLight in Hollywood. Movie tickets cost on average $18 each and concert tickets cost on average $40 each. Draw the consumer’s budget line on a graph.
For each of the following situations, draw a new graph with the updated budget line from below (for a total of five separate graphs). Label each line. If the new lines differ from the original budget line, explain why it has shifted.
- The consumer decides that she can only afford to spend $1080 on entertainment during the year instead of $1,800.
- She joins the ArcLight as a member, which reduces the average price per ticket to $15. Concert tickets still cost $40 on average and her budget is still $1,800.
- She decides to purchase only concert tickets that are in the orchestra for on average $75 each. Movie tickets still cost $18 and her budget is $1,800.
- She revises her budget and allocates $2,160 for entertainment; movie tickets cost $18 and concert tickets cost $40.