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You are reviewing your monthly budget and determine you have $60.00 to spend on either books or movies each month. (Remember you must have whole numbers not fractions) The books cost $8.00 and the movies cost $20.00. Put this into equation form.

Complete the following Total Utilities table.

Books

Total Utility

Quantity

Marginal Utility

Marginal Utility Per $

50

1

80

2

100

3

110

4

Movies

Total Utility

Quantity

Marginal Utility

Marginal Utility Per $

22

1

42

2

52

3

57

4

Using the equation created above solve to locate four points and plot them on a budget constraint line. Create the graph in Excel and paste onto your Word document answering the questions below. Review the tutorial on creating graphs in

How many books and movies would maximize your level of satisfaction given the budget of $60.00?

Are the charts above consistent with the Law of Diminishing Marginal Utility? Why or Why not?

What is the consumer surplus of purchasing three books?

If you were able to go to the matinee for movies at a price of $10.00 instead how would this change the amount of books and movies you could purchase?

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