Suppose a consumer must pay $P per visit to the local museum for each of the first 5 visits but $2P per visit from the 6^th visit on.With a composite consumption good on the Y-axis and visits to the museum on the X-axis,the budget line: A)is vertical after 5 visits. B)becomes steeper after 5 visits. C)becomes flatter after 5 visits. D)shifts outward after 5 visits.

Question

Quizplus · Accepted Answer

The budget line represents the various combinations of museum visits and spending on other goods that a consumer can afford with their limited income. 
For the first 5 visits, the price is constant at $P per visit. Therefore, the budget line has a constant slope of -P. After the 5th visit, the price increases to $2P per visit. This means that the slope of the budget line becomes steeper, and the budget line rotates around the intercept on the y-axis. 
Therefore, choice B is correct - the budget line becomes steeper after 5 visits. 
As for the best choice(s), it depends on the consumer's preferences and the prices of other goods. The consumer will choose the highest affordable point on the budget line that gives them the most satisfaction/utility.

Suppose a Consumer Must Pay $P Per Visit to the Local