|Question||Use the news clip in Problem 15 to work this question.
In problem with high gas prices, 12% of the people surveyed say that they have cancelled their Memorial Day road trip and 11% will take a trip near home. That may save consumers some money, but it will also likely hurt service stations, which will sell less gas and fewer snacks and hurt roadside hotels, which will have fewer rooms used and serve fewer meals.
a. Sketch a consumer’s preference map between gasoline and other Memorial Day trip-related goods and services. Draw a consumer’s budget line prior to the rise in the price of gasoline and mark the consumer’s best affordable point.
b. On your graph, show how the best affordable point changes when the price of gasoline rises.