EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 13A.1, Problem 2MQ
To determine
To analyze the utility-maximizing choice of the individual who doesn’t prefer to work if the right wage is not offered.
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What is the trend of the total utility
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…
Chapter 13A Solutions
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- 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 4.8 15 48 2.8 15 135 77 3.6 20 56 1.6 20 180 86 1.8 25 60 0.8 25 225 92 1.2 30 65 1 30 270 98 1.2 35 69 0.8 35 315 103 1 40 72 0.6 40 360 107 0.8 Terry decides to decrease her work hours from 20 to 10. What would be her marginal utility gain from having additional leisure time? 0.9 What would be marginal utility loss from less income? 2.7 What will be her total utility from both leisure and income when working 10 hours per week? The required value of the…arrow_forwardJanie works for an accounting firm. Her wage increased from $30 per hour to $40 per hour. She can work up to 50 hours each week. The table below shows her utility from different levels of leisure and income. Before her raise, if Janie decreases her hours of work from 30 to 20 hours per week, the marginal utility gain from having more leisure is: Hours of Leisure Total Utility from Leisure Income Total Utility from Income 0 0 0 0 10 29 300 40 20 54 400 72 30 75 600 96 40 86 800 108 50 92 900 116 1200 120 1500 122 1600 124 2000 125 Question 4 options: 29 21 13 7arrow_forwardElisha is starting a tuxedo rental business and plans to charge $80 for the first day plus an extra $30 for each day beyond the first day. Create an equation for the income Elisha will receive where I stands for total income and D is the amount of extra days.arrow_forward
- 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 4.8 15 48 2.8 15 135 77 3.6 20 56 1.6 20 180 86 1.8 25 60 0.8 25 225 92 1.2 30 65 1 30 270 98 1.2 35 69 0.8 35 315 103 1 40 72 0.6 40 360 107 0.8 Terry decides to decrease her work hours from 20 to 10. What would be her marginal utility gain from having additional leisure time? What would be marginal utility loss from less income? What will be her total utility from both leisure and income when working 10 hours per week? Does it make sense from the…arrow_forwardAkram spends all of his income on food and clothing. When the price of clothing decreases, he buys more clothing.Does the income effect cause her to buy more or less clothing? Explain.arrow_forwardJack currently works 38 hours per week at a wage rate of $15 per hour. His marginal rate of substitution is $20 per hour. Is Jack's utility maximized? If yes, explain why. If no, explain why not and discuss what Jack should do in order to further increase utility.arrow_forward
- Using a graph of budget lines and indifference curves, show how an increase in the price of bananas affects the amount of time the individual works.arrow_forwardJack's marginal utility of consumption is MUc = L - 6, and the marginal utility of leisure is MUL=C-40. Jack does not have any nonlabor income, i.e., V = 0. Jack faces a $48 an hour wage rate. Jack's total number of hours available per week is 150. What is Jack's optimal choice of consumption? (calculate to 2 decimal places)arrow_forwardThe marginal utility derived from the consumption of extra unit of commodity. True/Falsearrow_forward
- 1. What will be her total utility from both leisure and income when working 25 hours per week? 2. 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?arrow_forwarda) Chika has calculated the marginal utility that she derives from her paid employment and from leisure. This is presented in table below. In her ideal world, where she could work as few or as many hours as she wished, how would she allocate her sixteen waking hours? (She does need to sleep.) Hours 1 2 3 4 5 6 7 8 9 10 MU Paid Employment 105 95 85 75 65 55 45 35 25 15 MU Leisure 100 90 80 70 60 50 40 30 20 10 hours working and b) Unfortunately, Chika begins to realize that unless she gets an education she will not enjoy a high salary and therefore, will not be able to afford more leisure time. She therefore decides to spend six hours each day studying (in addition to her eight hours of sleep). How will she now divide the remaining hours between work and leisure? hours working and hours leisure. hours leisure.arrow_forwardThe prices she's considering are shown in the table below. Calculate the utility for each of the prices in the table. What is the average of the calculated utilities?arrow_forward
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