- This topic has 2 replies, 2 voices, and was last updated 1 year ago by
.
- Posts
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 $4.
Her marginal utility schedule is given below:
Number of trips Marginal utility of swimming Marginal utility of badminton
1 90 100
2 80 90
3 70 80
4 60 70
5 50 60
Which combination of activities gives Mrs Grey the highest utility?
Pick list:
Swimming trips Badminton sessions
1 5
3 4
4 3
2 4Can you please help me with this maths ?
For her first outing she could spend 3 on swimming (enjoying 90/3 = 30 utility) or 4 on badminton (enjoying 100/4 = 25 utility). So go for swimming. 22 left.
2nd outing: swimming = 80/3 = 26.730/$ 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.
- The topic ‘Marginal Utility’ is closed to new replies.