1) (a) If Abraham had an unlimited budget (price was no object to Abraham) he would purchase

a) 1

b) 2

c) 3

d) 4

e) 5

f) 6

g) more than 6

movies and

a) 1

b) 2

c) 3

d) 4

e) 5

f) 6

g) more than 6

game rentals.

b) With Abraham's budget set at $35 he would purchase

a) 1

b) 2

c) 3

d) 4

e) 5

f) 6

movies and

a) 1

b) 2

c) 3

d) 4

e) 5

f) 6

game rentals.

c)Suppose Abraham receives a raise and his entertainment budget increases to $50.If this was the case he would purchase

a) 1

b) 2

c) 3

d) 4

e) 5

f) 6

movies and

a) 1

b) 2

c) 3

d) 4

e) 5

f) 6

game rentals

(d) According to the optimal bundles calculated in parts (b) and (c), we can see that to Abraham movies are a(n)

(a) normal

(b) inferior

good and game rentals are a(n)

(a) normal

(b) inferior

good

Question 2

Abraham has $35 per month in his entertainment budget. He splits his time between going to the movies and renting video games. Each movie costs $10 while each video game rental costs $5. The measured total utility of each of his activities is shown in the table below. The table is split into two parts as some browsers have trouble displaying the entire table. Fill out the table completely. DO NOT use any units or dollar signs, simply enter the number (i.e. 7 or -3)