In her last-minute preparations for final exams, a student has set aside five hours to split between studying for two subjects, finance and economics. Her goal is to maximize the average grade received in the two courses. (Maximizing the average grade and maximizing the sum of the grades are equivalent goals.) According to her best guesses, grades vary with study as follows:

a. List the marginal values of additional hours worked for each subject.
b. How much time should the student spend studying each subject?
c. Suppose the student also is taking an accounting exam and estimates that each hour of studying will raise her grade by three points. She has allotted two hours for studying accounting (in addition to the five hours already mentioned). Is this an optimal decision? Explain. (Assume her objective is to maximize her average grade across the threecourses.)

Transcribed Image Text:

Study Hours Finance Grade Study s Economics Grade 70 78 83 75 81 85 87 89 90 90 92