Normal and inferior goods Solution Initial budget line is BC1 and new budget line is BC2 (parallel rightward shift from BC1). (1) Following shift factors are applicable: - Income increased while prices remained the same - Prices of both theater and concerts decreased while income remained the same (2) Plays are inferior good (since higher income has decreased the demand for plays, from 6 to 5) and concerts are normal goods (since higher income has increased the demand for concerts, from 2 to 5).

1. Normal and inferior goods
Solution
Initial budget line is BC1 and new budget line is BC2 (parallel rightward shift from BC1).
(1) Following shift factors are applicable:
- Income increased while prices remained the same
- Prices of both theater and concerts decreased while income remained the same
(2) Plays are inferior good (since higher income has decreased the demand for plays, from 6 to 5)
and concerts are normal goods (since higher income has increased the demand for concerts, from
2 to 5)