microeconomics

Suppose that you are vacationing at a resort in the Caribbean and you are trying to determine how to spend your time and money on two activities , windsurfing and snorkelling, which both cost $6 per hour. The marginal utility of the activities are shown in table below. WINDSURFING SNORKELLING Marginal Marginal No. of Marginal Total Utility Marginal Total Utility Hours Utility Utility per Dollar Utility Utility per Dollar Spent Spent 90 95 2 85 85 70 70 65 60 5 60 45 45 20 35 15 10 5 a) Complete the columns for total utilities in the above table. b) Assume that you have a budget of $42. To maximize your total utility, how would you allocate your budget between the two activities ? What is the resulting total utility? Windsurfing: $ and hours Snorkelling: $ and hours Total utility: utils c) At the end of the day, you dig deep into your pocket and discover an extra $12. How would you allocate your higher budget between the two activities so as to maximize your total utility ? What is the resulting total utility? Windsurfing: $ and hours Snorkelling: $ and hours Total utility:| utils d) Suppose that your utility from the two activities remains unchanged the next day, when you again arrive with $42 in your pocket. Unfortunately, you discover that the hourly charge for snorkelling has increased to $12. Complete the marginal utility per dollar columns in the table above. Round your answers to 2 decimal places. e) How will you now allocate your expenditures to maximize your total utility, assuming that partial hours cannot be purchased? Windsurfing: $ and hours Snorkelling: $ and hours Total utility: utils f) Given your answers in b) and e), at a budget of $42, draw the demand curve for snorkelling. Plot only the endpoints in the graph below. Show the effects of the change in the price of snorkelling in the graph. Use the drop-line tool to show the change in price. g) What has happened to the demand for windsurfing ? in the