Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
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Chapter 6, Problem 2SCQ
Take Jeremy’s total utility information in Exercise 6.1, and use the
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Donald likes fishing (X1) and hanging out in his hammock (X2). His utility function for these two activities is u(x1, x2) = 3X12X24.
(A) Calculate MU1, the marginal utility of fishing.
(B) Calculate MU2, the marginal utility of hanging out in his hammock.
(C) Calculate MRS, the rate at which he is willing to substitute hanging out in his hammock for fishing.
(D)Last week, Donald fished 2 hours a day, and hung out in his hammock 4 hours a day. Using your formula for MRS from (c) find his MRS last week.
(E) This week, Donald is fishing eight hours a day, and hanging out in his ham mock two hours a day. Calculate his MRS this week. Has his MRS increased or decreased? Explain why?
(F) Is Donald happier or sadder this week compared to last week? Explain.
How can one's choice of purchases/consumption be infuenced by utility or marginal utility?
Amy is currently spending all of her budget and she finds that the marginal utility
per dollar from dresses is less than the marginal utility per dollar from hats. To
maximize her utility, Amy should buy
fewer dresses and hats.
more hats and fewer dresses.
more dresses and fewer hats.
more dresses and hats.
probably change her purchases but more information is needed to determine if
she should buy more or fewer dresses and hats.
Chapter 6 Solutions
Principles of Economics 2e
Ch. 6 - Jeremy is deeply in love with Jasmine. Jasmine...Ch. 6 - Take Jeremys total utility information in Exercise...Ch. 6 - Explain all the reasons why a decrease in a...Ch. 6 - As a college student you work at a part-time job,...Ch. 6 - Who determines how much utility an individual will...Ch. 6 - Would you expect total utility to rise or fall...Ch. 6 - Would you expect marginal utility to rise or fall...Ch. 6 - Is it possible for total utility to increase while...Ch. 6 - If people do not have a complete mental picture of...Ch. 6 - What is the rule relating the ratio of marginal...
Ch. 6 - As a general rule, is it safe to assume that a...Ch. 6 - Why does a change in income cause a parallel shift...Ch. 6 - Think back to a purchase that you made recently....Ch. 6 - The rules of politics are not always the same as...Ch. 6 - Income Effects depend on the income elasticity of...Ch. 6 - Praxilla, who lived in ancient Greece, derives...Ch. 6 - If a 10 decrease in the price of one product that...
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- Elapsed time (in minutes) 30 60 90 120 150 Total utility of playing video games 20 45 63 78 83 40 62 72 76 76 Total utility of swimming ▸ Jenny pays $5 per hour to use the local swimming pool. What is her marginal utility per dollar for the first half hour of swimming?arrow_forwardElapsed time (in minutes) 30 60 90 120 150 Total utility of playing video games 20 45 63 78 83 Total utility of swimming 40 62 72 76 76 Jenny spends an average of $3 each hour she plays video games. What is her marginal utility per dollar for the second half hour?arrow_forwardStyles 15. 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 income here). Each movie takes 2 hours. Each gym trip takes 2 hours. Q of Gym Total Q of Movie Total Utility visits Utility from visits from Gym Visits movies 100 1 60 180 110 3 240 3 150 4 280 4 180 310 190 330 195 340 7 197 a) 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? b) Calculate the marginal utility of each gym visit'and movie. Then calculate the Marginal Utility per hour of each activity. c) How should he allocate his time to maximize his utility? 12arrow_forward
- If at a quantity consumed of 1 unit, total utility equals 25 and marginal utility equals 25, and at a quantity consumed of 2 units, total utility is unknown and marginal utility is 20, and at a quantity consumed of 3 units, total utility is 57 and marginal utility is unknown, what is marginal utility of the third unit?arrow_forwardRick eats only french fries and burgers at his office cafeteria. His weekly lunch budget is $48. Each burger costs $6 and each order of fries costs $3. When deciding how much of each good to buy, Rick knows that 2 burgers and 4 orders of french fries will give him a utility of 8. At his utility-maximizing point, Rick's utility is:arrow_forwardHow do your total and marginal utility change as you stay at home watching the same TV show (not necessarily the same episode) alone all day?arrow_forward
- Think about a favorite thing you often buy or enjoy. It could be your favorite food, a favorite place to visit, a type of event, or something you make us part of a hobby. As part of this review you will create a chart ( just like the examples of total in marginal utility) showcasing the favorite item. Include the following information: How many you purchase or consume in the course of a day, week, or a month. Marginal utility of additional consumptions The total utility of all consumptions. Let’s assume that the largest utility you get from any one item is 20. Make it as interesting as you can by considering something that is important to you. Fill in the chart. arrow_forwardPrice of Can of Beer = $0.50 Total Utility Price of Slice of Pizza = $1.00 Total Utility Slices per Week Cans per Week 1 32 15 63 29 3 42 91 4 54 115.75 65 136 6. 75.75 154 86 171 8. 96 8 187 9. 105 201 10 113 10 213 If this consumer only has $10.00 to spend on beer and pizza a week, and is currently consuming 7 slices of pizza and 6 cans of beer per week, what should this consumer do to maximize his utility? Buy only beer. Buy only pizza. Buy more beer and less pizza. Buy more pizza and less beer. 234 567009arrow_forwardTake Jeremy’s total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremy’s utility. 6.1Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can either callher on the land-line phone for five cents per minute or he can drive to see her, at a round-trip cost of $2 in gasolinemoney. He has a total of $10 per week to spend on staying in touch. To make his preferred choice, Jeremy uses ahandy utilimometer that measures his total utility from personal visits and from phone minutes. Using the values inTable 6.6, figure out the points on Jeremy’s consumption choice budget constraint (it may be helpful to do a sketch)and identify his utility-maximizing point.arrow_forward
- The marginal utility of the 8th can of beer isarrow_forwardBecky needs to decide how many cups of coffee and pieces of cake she will buy for a meeting with an office mate. She estimates her total utility for different quantities of coffee and cakes below. A cup of coffee is $1.00, and each piece of cake is $0.50. Becky has a total of $3 to spend. What is Becky's total utility if she buys 1 cup of coffee and 4 pieces of cake? Cups of Coffee 1 2 3 4 5 6 Utility from Consumption Pieces of Cake 1 2 3 4 5 6 A B C D Total Utility from Cups of Coffee 33 56 79 Total Utility from Pieces of Cake 15 32 48 63 77 90 Total Utility of Different Consumption Bundles Consumption Bundle Cups of Coffee Pieces of Cake Total Utility 3 0 2 2 1 4 0 6arrow_forwardDigital Apps per Period 0 1 2 3 4 5 Total Utility of Digital Apps per Period (utils) which 0 50.0 95.0 135.0 171.5 200.0 Marginal Utility (utils) 50.0 45.0 40.0 36.5 28.5 Marginal Utility Portable per Dollars Spent Power Banks (price = $5.97) per Period | 8.4 7.5 6.7 6.1 4.8 0 1 GTA W N 3 4 5 Total Utility of Portable Power Banks per Period (utils) 0 25 47 65 80 89 Marginal Utility (utils) 25 22 18 15 9 Marginal Utility per Dollars Spent (price = $2.70) 9.3 8.1 6.7 5.6 3.3 Consider the table above. Suppose the consumer's income is $26. Does the consumer spend all of her income if she purchases the optimal quantities of digital apps and portable power banks? The optimum quantity of digital apps purchased is and the optimum quantity of portable power banks purchased is. (Enter your responses as whole numbers.) Spending on digital apps is $ and spending on portable power banks is $. (Enter your responses rounded to one decimal place.) Thus, total spending at the consumer optimum is $ the…arrow_forward
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