FIGURE 6.3 How a Change in Income Affects Consumption Choices The utility-maximizing choice on the original

budget constraint is M. The dashed horizontal and vertical lines extending through point M allow you to see at a
glance whether the quantity consumed of goods on the new budget constraint is higher or lower than on the original
budget constraint. On the new budget constraint, Kimberly will make a choice like N if both goods are normal goods.

If overnight stays is an inferior good, Kimberly will make a choice like P. If concert tickets are an inferior good,

Kimberly will make a choice like Q.

Now, assume that the income Kimberly has to spend on these two items rises to $2,000 per year, causing her

budget constraint to shift out to the right. How does this rise in income alter her utility-maximizing choice?

Kimberly will again consider the utility and marginal utility that she receives from concert tickets and
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