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You just won a $120 shopping spree at a store that sells only DVDs and CDs. You are trying to determine what combination of these

You just won a $120 shopping spree at a store that sells only DVDs and CDs. You are trying to determine what combination of these two goods would maximize your utility. The price of CDs is $10 and DVDs are $20. Below is the total utility you receive from consuming these goods.

a. Construct your consumption possibilities schedule. (14 marks)

Point

DVDs ($20)

CDs ($10)

A

B

C

D

E

F

G

b. Complete the table. (28 marks)

CDs ($10)

Total Utility

Marginal Utility

Marginal Utility per Dollar

DVDs ($20)

Total Utility

Marginal Utility

Marginal Utility per Dollar

0

0

0

0

1

60

1

180

2

110

2

240

3

150

3

380

4

180

4

500

5

200

5

600

6

210

6

660

c. What is your utility maximization level?(2 marks)

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