Question

Jane always gets twice as much utility from an extraballet ticket as she does from an extra basketball ticket,regardless of how many tickets of either type she has. Draw Jane’s income-consumption curve and her Engel curve for ballet tickets.

Short answer

The income-consumption curve is given below:

The Engel curve for ballet tickets is given below:

Step-by-step solution

Explanation of the graphs

Basketball and ballet tickets for Jane will be considered as substitute goods. It is mentioned that Jane gets two times more utility from an extra ballet ticket than from an extra basketball ticket.

Jane will choose ballet tickets if the price is less than or equal to twice the price of basketball tickets. However, if ballet tickets are more than twice the price of basketball tickets, she will choose basketball tickets.

• The income consumption curve is given below:

The income consumption curve of Jane would be lying on either of the two-axis, depending upon the prices of the tickets and what she chooses.

The graph above shows the units of ballet tickets taken on the y-axis and units of basketball tickets taken on the x-axis. The income consumption curve is the two arrows along the y and x-axis depicting that Jane can choose any one, since both basketball and ballet are substitutes.

• The Engel Curve is given below:

In the graph above, income is taken along the y-axis and units of ballet tickets on the x-axis. The upward-sloping Engel curve shows the relationship between income and demand/consumption. The higher the income, the greater will be the demand for ballet tickets.