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, and he can consume more movies and concerts, an additional movie has less value to Max than before. In particular, assume that Maxs marginal utility values are as in the table below. 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.

Dollars $8.00 $6.00- $4.00 $%2.00 LRATC 200 250 Economies of Scale iConstant Diseconomies Returns to of Scale Scale Pizzas Served per Day Budget $200 per month Concerts at S20 each Movies at $10 each Marginal (2) Utlity (5) Marginal (1) Margi per 4) Marginal Utility Number Utility Dolla Number Utlity per Dollar from Spent orn from Spent of Last Las Movies Last per Concert Concert per Month (MU) (MUP) Month (MU) (MU/P) 250 180 100 50 40 30 10 12 12.5 13 5 4 3 15 16 18 20 25 10 0