Suppose our consumer's budget for DVDs (Digital Video Discs) and Other Goods is shown to the right. Her income is IO and the initial price of DVDs is PD1. This yields a budget constraint with a slope of -PD1 and a vertical intercept of IO.

    Suppose her chosen consumption bundle on this budget is point A, shown to the right, meaning she buys DO discs. Now, suppose the price of DVDs falls to PD2. Her budget constraint becomes less steep, as shown to the right. She selects point B on this new budget constraint increasing her DVD purchase to DN.

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