Question

Damien Matthews is a busy actor. He allocates his Quantity Utility Quantity Utility ee time to watching movies and working out at the gym. The accompanying table shows his utility from the number of times per week he watches a movie or goes to the gym. Damien has 14 hours per week to spend on watching movies and going to the gym. Each movie takes 2 hours and each gym3 visit takes 2 hours a. Which bundles of gym visits and movies can from movies 60 110 150 180 190 195 197 of gym from gym of visits 100 180 240 280 310 330 340 movies 2 4 4 Damien consume per week if he spends all his time either going to the gym or watching movies? Draw Damien's budget line in a diagram with gym visits on the horizontal axis and movies on the vertical axis. Calculate the marginal utility of each gym visit and the marginal utility of each movie. Then calculate the marginal utility per hour spent at the gym and the marginal utility per hour spent watching movies. Use the utility-maximizing principle of marginal analysis to decide how Damien should allocate his time. b. c.

Answer 1

Given that (a) Below is the computation of marginal utility and marginal utility per hour of both the good if all time is spent in gym a maximum of 14/2 = 7 trip can be conducted similarly, when all time is spent in watching movies total of 14/2 = 7 movies can be seen (b) This is done in the table above marginal utility = (change in TU/(Change in Q) (c) The optimal rule is (Mu/hr) gym = (Mu/nv) movies in addition to the fact that the all time is exhausted Here (HU/hr) gym = (MU/hr) movies = 15 the optimal bundle Hence it should be 5 gyH visits ans 4 movies at the optimum C