(a) The substitution effect is the change in quantities demanded due to the change in relative prices of basketball and concert tickets after the price of basketball tickets decreases. The budget constraint BC′ is parallel to Carlos’s new budget constraint BC₂ but tangent to his original utility level U₁. The point of tangency between BC′ and U₁, consumption bundle A′, is the bundle Carlos would purchase if relative prices changed but his purchasing power did not. The change from bundle A to bundle A’ is the substitution effect.(b) The income effect is the change in quantities demanded due to the change in the consumer’s purchasing power after the change in prices. When the price of basketball tickets decreases, Carlos can afford to purchase a larger bundle than he could before the price change. The change in the quantity of goods consumed from bundle A′ to B represents the income effect.(c) The total effect is the sum of the substitution and income effects. In this case, Carlos buys 1 more concert ticket and 2 more basketball tickets.