Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. Madison enjoys ice skating and biking. The table below shows the total utility (TU) she gets from each activity. (11 points total) Hours per

image text in transcribed
image text in transcribed
4. Madison enjoys ice skating and biking. The table below shows the total utility (TU) she gets from each activity. (11 points total) Hours per day TU from ice MU from ice TU from biking MU from skating skating biking 300 65 2 550 125 750 180 4 900 230 U 1000 275 6 1050 315 a. Fill in the marginal utility (MU) from each additional hour of ice skating and biking on the table above. Does the marginal utility for each activity make sense? Why or why not? (4 points) b. Suppose Madison has a $70 budget and unlimited leisure time. Ice skating costs $10/hour and a bike rental is $5/hour. In order to maximize her total utility, how much time does Madison spend on ice skating and biking? Show your work. (Hint: Think about how much it costs to buy additional utility.) (7 points)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting concepts and applications

Authors: Albrecht Stice, Stice Swain

11th Edition

978-0538750196, 538745487, 538750197, 978-0538745482

Students also viewed these Economics questions