Question: You have decided to spend $40 this month on CDs and movies. The total benefits you receive from different quantities of CDs and movies are

You have decided to spend $40 this month on CDs and movies. The total benefits you receive from different quantities of CDs and movies are shown in the table below. The price of a CD is $10 and the price of a movie is $10.

a. Complete columns B, C, E, and F in the table above.
b. What combination of movies optimizes your total benefit? Explain your reasoning.
c. Suppose the local movie theater decides to offer a student discount, and as a result, the price of a movie falls to $5. If the price of CDs remains $10 and you continue to spend $40 on CDs and movies, what combination of movies optimizes your total benefit? Explain your reasoning.

CDs Movies Marginal Benefit Total Marginal Quantit Benefit Margin Benefit per Total Marginal per Dollar (A) Benefit (B) Dollar (C) Benefit (D) Benefit (E) (F) 200 360 500 620 140 260 360

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