Terry attends college and works part-time in a drug store. She can work up to 40 hours each week and is paid $9 per hour. The following table shows her utility from different levels of leisure and income. Hours of Leisure Total Utility from Leisure Marginal Utility of Leisure Work Hours Income Total Utility from Income Marginal Utility from Income 5 18 0 5 45 35 0 10 34 3.2 10 90 59 0.53 15 48 2.8 15 135 77 0.4 20 56 1.6 20 180 86 0.2 25 60 0.8 25 225 92 0.13 30 65 1 30 270 98 0.13 35 69 0.8 35 315 103 0.11 40 72 0.6 40 360 107 0.03 Terry decides to increase her work hours from 20 to 25 hours per week. What would be her marginal utility loss from having less leisure time? 6 What would be her marginal utility gain from having an additional income? 13 What will be her total utility from both leisure and income when working 25 hours per week? 140 Does it make sense from the perspective of utility for Terry to increase her work hours? (Think about the total utility calculations.). Why or Why not?
Terry attends college and works part-time in a drug store. She can work up to 40 hours each week and is paid $9 per hour. The following table shows her utility from different levels of leisure and income. Hours of Leisure Total Utility from Leisure Marginal Utility of Leisure Work Hours Income Total Utility from Income Marginal Utility from Income 5 18 0 5 45 35 0 10 34 3.2 10 90 59 0.53 15 48 2.8 15 135 77 0.4 20 56 1.6 20 180 86 0.2 25 60 0.8 25 225 92 0.13 30 65 1 30 270 98 0.13 35 69 0.8 35 315 103 0.11 40 72 0.6 40 360 107 0.03 Terry decides to increase her work hours from 20 to 25 hours per week. What would be her marginal utility loss from having less leisure time? 6 What would be her marginal utility gain from having an additional income? 13 What will be her total utility from both leisure and income when working 25 hours per week? 140 Does it make sense from the perspective of utility for Terry to increase her work hours? (Think about the total utility calculations.). Why or Why not?
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 16SQ
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Question
Terry attends college and works part-time in a drug store. She can work up to 40 hours each week and is paid $9 per hour. The following table shows her utility from different levels of leisure and income.
|
Hours of Leisure |
Total Utility from Leisure |
|
Work Hours |
Income |
Total Utility from Income |
Marginal Utility from Income |
|
5 |
18 |
0 |
5 |
45 |
35 |
0 |
|
10 |
34 |
3.2 |
10 |
90 |
59 |
0.53 |
|
15 |
48 |
2.8 |
15 |
135 |
77 |
0.4 |
|
20 |
56 |
1.6 |
20 |
180 |
86 |
0.2 |
|
25 |
60 |
0.8 |
25 |
225 |
92 |
0.13 |
|
30 |
65 |
1 |
30 |
270 |
98 |
0.13 |
|
35 |
69 |
0.8 |
35 |
315 |
103 |
0.11 |
|
40 |
72 |
0.6 |
40 |
360 |
107 |
0.03 |
Terry decides to increase her work hours from 20 to 25 hours per week.
- What would be her marginal utility loss from having less leisure time? 6
- What would be her marginal utility gain from having an additional income? 13
- What will be her total utility from both leisure and income when working 25 hours per week? 140
- Does it make sense from the perspective of utility for Terry to increase her work hours? (Think about the total utility calculations.). Why or Why not?
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