Question: Consider the graph at right, which illustrates Tylers preferences for DVD rentals and in theater movie tickets. Suppose that DVD rentals always cost $1, and

Consider the graph at right, which illustrates Tyler€™s preferences for DVD rentals and in theater movie tickets. Suppose that DVD rentals always cost $1, and that Tyler€™s income is $100 per week.

a. If the price of a movie ticket is $10, draw Tyler€™s budget line. Be very careful to draw to scale. How many movies does he see in the theater?
b. In another graph, plot a point that reflects how many movies Tyler sees in the theater at a price of $10.
c. The movie theater changes the price of tickets to $12.50. Repeat your work in (a) and (b) using this new price.
d. Tyler€™s mother gives him a discount card that allows him to purchase movie tickets for $7.50. Repeat your work in (a) and (b) using this new price.
e. Connect the dots in your second graph to complete Tyler€™s demand curve for movie tickets.

DVD 125 rentals 100- 75 50 UZ U2 Ui 0-2 4 6 8 10-12-14 Movie tickets

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