11. Consider the following graph, 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.

Transcribed Image Text:

DVD 125- rentals 100- 75- 50 25- 0 2 4 U3 U2 U- 6 8 10 12 14 Movie tickets