Kristine is a fan of both action movies and classical concerts. This month she has €480 to spend on the two activities. The original budget constraint is shown in the graph below. Let X represent action movies and Y represent classical concerts.

a. What is the equation of the original budget constraint?

b. What is the price of a ticket to an action movie? A classical concert?

c. Assume a price change occurs and Kristine now faces the new budget constraint. What is the equation of the new budget constraint?

d. With the new budget constraint, what is the price of a ticket to an action movie? A classical concert?

Transcribed Image Text:

Classical concerts (Y) 40 32 24 16 8 08 Original budget constraint 16 24 32 Action movies (X) 40 New budget constraint 48