6. Betty has the same income, budget constraint and consumption bundle as Al this year and is getting the same size raise. For Betty movies are an inferior good, thus her consumption for next year must lie between the points:

   If movies are inferior for Betty then she will reduce her consumption when her income goes up. Since she is going to 20 movies on the lower budget constraint she won't consume more than that after her income increases, so her new bundle would have to lie below 20 movies, or between C and D.

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