Liwaa Joudeh recently opened his own basket weaving studio. He sells finished baskets in addition to selling the raw materials needed by customers to weave baskets of their own. Unfortunately, owing to space limitations, Liwaa is unable to carry all varieties of kits originally assembled and must choose between two basic packages.

The Basic Kit includes undyed, uncut reeds (with dye included) for weaving one basket. This basic package costs Liwaa $16 and sells for $50. The second kit, called Stage 2, includes cut reeds that have already been dyed. With this kit the customer need only soak the reeds and weave the basket. Liwaa produces the Stage 2 kit by using the materials included in the Basic Kit. Because he is more efficient at cutting and dying reeds than his average customer, Liwaa is able to produce four Stage 2 kits in one hour from one Basic Kit. (He values his time at $20 per hour.) The Stage 2 kit sells for $55