Sharon enjoys going to the theater to see plays, and she also enjoys going to ro

Question

Sharon enjoys going to the theater to see plays, and she also enjoys going to rock concerts. The following diagram shows two of Sharon's indifference curves for going to plays and concerts. With Sharon's initial budget constraint (BC_1), she chose to go to five concerts and five plays per month (point X). Then her budget constraint shifted to BC_2, and she chose to go to four concerts and four plays per month (point Y). Of the following choices, which could have shifted Sharon's budget constraint from BC_1 to BC_2? Check all that apply. The prices of both theater and concert tickets decreased while her income stayed the same. The price of theater tickets increased while her income and the price of concert tickets stayed the same. The prices of both theater and concert tickets increased while her income stayed the same. Her income decreased while the prices of theater and concert tickets stayed the same. Based on Sharon's consumption of plays and concerts after her budget constraint shifted, plays are goods and concerts are goods.

Explanation / Answer

1. Option D is correct.

When the income increases or decreases, the budget line shifts paralell to the original budget line either to left (income falls) or to right (income rises).

Note : with a change in price of the good, there is a pivital shift of the budget line.

2. Normal goods, normal goods.

The plays and concerts are both normal goods because as the income falls, the consumption also falls. For inferior goods, the demand falls add the income rises as the consumer would switch over to superior quality of goods.

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