Each evening at the movies costs our consumer $40 (tickets + snacks + babysitting + parking) and each evening at her favorite club costs her $60 (cover charge + drinks and snacks + babysitting + parking). Finally, suppose our consumer has $1,200 each year to spend on going out.

If she spends all her entertainment budget on evenings at her favorite nightclub she can go $1,200 ÷ $60 = 20 times, while if she only goes to movies she can go $1,200 ÷ $40 = 30 times. She can afford either (but of course not both) of these consumption bundles.

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