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Question: a consumer has a 1800 budget for entertainment which she...

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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.

  1. The consumer decides that she can only afford to spend $1080 on entertainment during the year instead of $1,800.
  2. 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.
  3. 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.
  4. She revises her budget and allocates $2,160 for entertainment; movie tickets cost $18 and concert tickets cost $40.
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