Assume that Joe has $80 to spend on books and movies each month and that both goods must be purchased whole (no fractional un
its). Movies cost $8 each, and books cost $20 each. Joe's preferences for movies and books are summarized by the following information.No. per Month Movies TU Movies MU Movies MU/$ No. per Month Books TU Books MU Books MU/$ 1 50 1 22 2 80 2 42 3 100 3 52 4 110 4 57 5 116 5 60 6 121 6 62 7 123 7 63 a. Fill in the figures for marginal utility and marginal utility per dollar for both movies and books.b. Are these preferences consistent with the law of diminishing marginal utility? Explain briefly. c. Given the budget of $80, what quantity of books and what quantity of movies will maximize Joe’s level of satisfaction? Explain briefly.e. Now suppose the price of books falls to $10. Which of the columns in the table must be recalculated? Do the required recalculations. f
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