In Figure, we assumed that when Maxs income rose, his marginal utility values for any given number of movies or concerts remained the same.

But now suppose that when Maxs income rises, having the ability to enjoy more concerts or movies makes the last movie and the last concert less valuable to him, so all the marginal utility numbers shrink. In particular, assume that Maxs marginal utility values are as in the following table. Fill in the blanks for the missing values, and find Maxs utility- maximizing combination of concerts and movies. In Figure in the chapter, locate the new combination as a point on the $200 budget line. (It will not be one of the labeled points.) With these new marginal utility values, is one of the two goods inferior? Explain.

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8.00 $6.00 LRATC $4.00 $2.00 200 250 Economies of Scale Constant Returns to Scale Diseconomies of Scale Pizzas Served per Day Budget - S200 per month Concerts at $20 each Movies at $10 each Marginal (2) Ulity (5) Marginal (1 Marginal per 4 Marginal Utility Number Utility DollarNumber Utility per Dollar from Spent on of from Spent on of Concerts Last Last Movies Las Last pe Concert Concert per Movie Movie Month (M) (M) Month (MUM) (MU/PM) 20 19 18 17 16 15 0 10 15 18 20 36 32 28 20 15 25 30 35 38 45 13 12 4 0