Question

Assignment 5 Worksheet: Utility Theory Worksheet Worksheet instructions: 1. Complete this worksheet. 2. Once completed, nanvig ate tssignment 5 on Blackboard. This can be found under the 3. Refer to this worksheet when answering the questions online for Assignment 5 Module 5 Assignments folder Chapter 6: Marginal Decision Rule 1. Joe Higgins is thinking about how much time to spend studying for a biology exam tomorrow. Using "utilit calculations are shown in the following table. y units" he measures the benefits and costs of study: his 6 Hours spent studying o 2 4 280 300 300 Total benefit 1so240 0 150 200 250300 Total cost 0 50 100 Net benefit Fill in the fourth row for net benefit in the table. Use the midpoint convention to emphasize that the net benefit is a marginal value showing the gain as hours spent increase by one-hour increments. a. (In English, the "net benefit" is the increase in benefit minus the increase in cost.) b. Based on the marginal decision rule, how many hours should Joe spend studying for his biology exam?

A and B please

Answer 1

The marginal decision rule states that an activity should be expanded if its marginal benefit exceeds its marginal cost. the marginal benefit of this activity is the utility gained by spending another $1 on the on the study. How much benefit derived by spending an additional $ on this activity divided by its price is called at marginal utility. But there is difference between the marginal utility and the marginal benefit. Mrginal utility describes that one economic actor receives from consuming one additional unit of good while Marginal benefit describes what the consumer is willing to pay to acquire one more unit of good. Marginal benefit can be described using cardinal numbers. Marginal benefit can be seen as a device used to capture marginal utility and apply it directly in a measurable way. When marginal benefit exceeds the listed price of the good, consumers continue to purchase units of good until the marginal benefit no longer exceed price.

A) as you can see in the image as hours spent in studying increase from 0 to 1 the benefit has increase to 100 with additional cost of 50, hence the net benefit would be 100.

when the study hours increase from 1 to 2 the benefit increases from the 100 to 180 with an additional cost of 50, and hence the net benefit would be 80 (180-100) and same further

u can notice the downward trend of the benefit derived even though there is increse in cost and hours spending in study because when marginal benefit exceeds the costs, consumer continue in same trend until the marginal benefit no longer exceed price.B b) joy should study 3 hours where his net benefit is 60 and the total cost is 150, this is the level of satisfaction comparing the benefit and the cost. According to cost and benefit rule the cost must be adjusted and balaced according to the benefit.

The marginal decision rule states that an activity should be expanded if its marginal benefit exceeds its marginal cost. the marginal benefit of this activity is the utility gained by spending another $1 on the on the study. How much benefit derived by spending an additional $ on this activity divided by its price is called at marginal utility. But there is difference between the marginal utility and the marginal benefit. Marginal utility describes that one economic actor receives from consuming one additional unit of good while Marginal benefit describes what the consumer is willing to pay to acquire one more unit of good. Marginal benefit can be described using cardinal numbers. Marginal benefit can be seen as a device used to capture marginal utility and apply it directly in a measurable way. When marginal benefit exceeds the listed price of the good, consumers continue to purchase units of good until the marginal benefit no longer exceed price.