-George Has a $600 Annual Entertainment Budget That He Uses

Essay

-George has a $600 annual entertainment budget that he uses to buy trips to the movies and dinners at local restaurants. The figure above shows indifference curves and budget lines for these two goods. The price of a movie is $15.
a) Along budget line BL₁, what is the price of a dinner?
b) What combination of dinners and movies will George select along budget line BL₁?
c) Budget line BL₂ represents a change in the price of dinners from that along BL₁. What is the new price of dinners along this budget line?
d) What combination of dinners and movies will George select along budget line BL₂?
e) Use the information in this problem to give two points on George's demand curve for dinners.