Damian Matthews is busy. He allocates his free time between watching movies and
ID: 1191858 • Letter: D
Question
Damian Matthews is busy. He allocates his free time between watching movies and working out at the gym. The table below shows his utility from the number of times per week he watches a movie or goes to the gym. Damien has 14 hours a week to spend on movies or the gym (think of hours like $ of takes 2 hours. Each gym trip takes 2 hours. What bundles of gym visits and movies can Damien consume if he spends 1) all his time in the gym or 2) all his time watching movies? Calculate the marginal utility of each gym visit and movie. Then calculate the Marginal Utility per hour of each activity. How should he allocate his time to maximize his utility?Explanation / Answer
Marginal utility(MU)of Visits to Gym or Movie(of 2 hours) = Change in Total Utility/Change in Visits
M.U. Per Hour = M.U. Per Visit/2
By applying these formulaes we arrive at following Marginal utilities
No of Gym Visits Total Utility from Gym Visit Marginal Utility of each gym visit Marginal utility per hour oy Gym No of Movie Visits Total Utility from Movie Visit Marginal Utility of each Movie visit Marginal utility per hour of Movie 1 100 100 50 1 60 60 30 2 180 80 40 2 110 50 25 3 240 60 30 3 150 40 20 4 280 40 20 4 180 30 15 5 310 30 15 5 190 10 5 6 330 20 10 6 195 5 2.5 7 340 10 5 7 197 2 1Related Questions
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