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Marginal Utility

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA BT – FIA FBT › Marginal Utility

  • This topic has 2 replies, 2 voices, and was last updated 2 years ago by Zain098.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • May 6, 2023 at 2:42 pm #683990
    Zain098
    Participant
    • Topics: 5
    • Replies: 4
    • ☆

    Mrs Grey likes swimming and playing badminton as part of her exercise routine. She has a budget of up to $25 to spend each week on getting fit. Each trip to the swimming pool costs $3, and each badminton session costs $4.
    Her marginal utility schedule is given below:
    Number of trips Marginal utility of swimming Marginal utility of badminton
    1 90 100
    2 80 90
    3 70 80
    4 60 70
    5 50 60
    Which combination of activities gives Mrs Grey the highest utility?
    Pick list:
    Swimming trips Badminton sessions
    1 5
    3 4
    4 3
    2 4

    Can you please help me with this maths ?

    May 7, 2023 at 8:19 am #684009
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10594
    • ☆☆☆☆☆

    For her first outing she could spend 3 on swimming (enjoying 90/3 = 30 utility) or 4 on badminton (enjoying 100/4 = 25 utility). So go for swimming. 22 left.

    2nd outing: swimming = 80/3 = 26.730/$ or badminton still 25 (still 1st session for that). So, swim again and 19 left.

    3rd outing: s = 70/3 = 23.3; b = 25 still. So go for b. 15 left

    4th outing: s = 23.3; b = 90/4 = 22.5. So s. 12 left

    5th outing: s = 60/3 =20; b = 90/4 = 22.5. So b. 8 left

    6th outing: s = 60/3 = 20 b = 80/4 = 20. Indifferent. Say s then 5 left

    7th outing s = 50/3 z= 16.7; b = 80/4 =20. Choose b 1 left.

    Therefore, in total s = 4 and b = 3 outings.

    May 7, 2023 at 1:52 pm #684018
    Zain098
    Participant
    • Topics: 5
    • Replies: 4
    • ☆

    Thank You

  • Author
    Posts
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  • The topic ‘Marginal Utility’ is closed to new replies.

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