. Madison enjoys biking and ice skating. The table below shows the total utility (TU) She...

 

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. Madison enjoys biking and ice skating. The table below shows the total utility (TU) She gets from each activity. (11 points total) Hours per week TU from biking 1 45 2 81 3 108 4 126 5 135 6 135 7 135 135 MU from biking TU from ice skating MU from ice skating 48 80 104 120 128 128 128 128 8 a. Fill in the marginal utility (MU) from each additional hour of ice skating and biking on the table above. (a) Does the total utility for each activity increase, decrease, or remain the same (i.e., is the marginal utility for each activity positive, negative, or zero), and does this pattern make sense? (b) Does the marginal utility for each activity increase or decrease, and does this pattern make sense? Why or why not? (4 points) b. Suppose Madison has a $24 weekly budget and unlimited leisure time. Biking costs $3/hour and ice skating costs $4/hour. Graph Madison's budget constraint with biking on the horizontal axis and ice skating on the vertical axis. Label the horizontal and vertical axes and the horizontal axis and vertical axis intercepts. (3 points) C. In order to maximize her total utility, how much time does Madison spend on biking and ice skating each week? Show your work. (Hint: Think about how much it costs to buy additional utility, or calculate the marginal rates of substitution and the price ratio.) (4 points) . Madison enjoys biking and ice skating. The table below shows the total utility (TU) She gets from each activity. (11 points total) Hours per week TU from biking 1 45 2 81 3 108 4 126 5 135 6 135 7 135 135 MU from biking TU from ice skating MU from ice skating 48 80 104 120 128 128 128 128 8 a. Fill in the marginal utility (MU) from each additional hour of ice skating and biking on the table above. (a) Does the total utility for each activity increase, decrease, or remain the same (i.e., is the marginal utility for each activity positive, negative, or zero), and does this pattern make sense? (b) Does the marginal utility for each activity increase or decrease, and does this pattern make sense? Why or why not? (4 points) b. Suppose Madison has a $24 weekly budget and unlimited leisure time. Biking costs $3/hour and ice skating costs $4/hour. Graph Madison's budget constraint with biking on the horizontal axis and ice skating on the vertical axis. Label the horizontal and vertical axes and the horizontal axis and vertical axis intercepts. (3 points) C. In order to maximize her total utility, how much time does Madison spend on biking and ice skating each week? Show your work. (Hint: Think about how much it costs to buy additional utility, or calculate the marginal rates of substitution and the price ratio.) (4 points)

Answer rating: 100% (QA)

a To fill in the marginal utility MU from each additional hour of ice skating and biking we can calculate the difference in total utility TU between consecutive hours Hours per week TU from biking MU ... View the full answer