Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved
Each time our consumer gives up two evenings night clubbing she can afford 3 more movies. As we show on the graph to the right, if she was considering the bundle (3, 18) and decides to give up 4 more evenings at her nightclub she can afford 6 more evenings at the movies each year. So the bundle (9, 14) is also one she can afford.
The ratio of the price of an evening at the movies to the price of an evening at her favorite night club tells us the rate at which she can substitute one for the other. As 40/60 = 2/3 she can afford 3 evenings at the movies for every 2 night club evenings given up.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved