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Mike has preferences over streaming movies (M) and playing video games (V) given by: U( M, V ) = MV Mike's budget for home entertainment

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Mike has preferences over streaming movies (M) and playing video games (V) given by: U( M, V ) = MV Mike's budget for home entertainment is $48 per month. Movies and video games are the only forms of home entertainment he consumes. Movies cost $1 per movie to stream and video games cost $4 per month to play. What is Mike's optimal bundle of movies and video games? Hint: the partial derivatives of functions of the form f (X, Y) - Xay are of axa-1yb and ax of byayb-1 (and remember that marginal utilities are partial derivatives of the utility aY function)

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