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1.The true value placed on a product or service is the value
assigned by each individual. The consumer surplus is the difference between
this value and the actual price paid for that product or service.

Almost everyone has an item they put a higher value on than
the price warrants. They would rather pay a premium than to do without. The
consumer surplus on these items is high. What items do you cherish the most?
Why are you willing to pay more? Explain.

Need 300 words

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2. You are reviewing your monthly budget and determine you
have $60.00 to spend on either books or movies each month. (Remember you must
have whole numbers, not fractions) The books cost $8.00 and the movies cost
$20.00. Put this into equation form.
Complete the following Total Utilities table.
Books
Total Utility Quantity Marginal Utility Marginal Utility Per $
50 1
80 2
100 3
110 4
Movies
Total Utility Quantity Marginal Utility Marginal Utility Per $
22 1
42 2
52 3
57 4
Using the equation created above, solve to locate four
points and plot them on a budget constraint line. Create the graph in Excel and
paste onto your Word document answering the questions below. Review the
tutorial on creating graphs in Week 01 if you run into any problems.
Write a one page response answering the following questions
about your graph and tables:
1. How many
books and movies would maximize your level of satisfaction given the budget of
$60.00?
2. Are the
charts above consistent with the Law of Diminishing Marginal Utility? Why or
Why not?
3. What is
the consumer surplus of purchasing three books?
4. If you
were able to go to the matinee for movies at a price of $10.00 instead, how
would this change the amount of books and movies you could purchase?

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