One important change that alters consumption behavior is a change in income. To the right we show the effect on our consumer's budget constraint of an increase in income or available entertainment funds. Her budget constraint shifts up and to the right, but the slope doesn't change because the prices have not changed.

    She can now afford 30 club visits if she spends all her money this way. Since these evenings cost her $60 each, her income must have risen by 10 x $60 = $600 to bring her total to $1,800. We could have arrived at the same result using Movie expenditure.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved