Paula has set aside $60 monthly budget to attend plays and watch movies. She lik
ID: 1168453 • Letter: P
Question
Paula has set aside $60 monthly budget to attend plays and watch movies. She likes plays exactly three time as much as she likes movies. (Plays and movies are perfect substitutes with 1 to 3 ratio.)
a. Draw her indifference curves.
b.If plays tickets cost $12 each and movie tickets cost $6 each, show her budget line and the highest attainable indifference curve. How many plays will she see? How many movies will she see?
c. If the price of movies decreases to 4 dollars how many movies will she see?
Explanation / Answer
Not able to upload graph.
Paula will obtain optimal consumption is she attends 4 plays and 2 movies.
If the price for movie tickets is $4 then she will watch 3 movies and attend 4 plays.