a) Chika has calculated the marginal utility that she derives from her paid employment and from leisure. This is presented in table below. In her ideal world, where she could work as few or as many hours as she wished, how would she allocate her sixteen waking hours? (She does need to sleep.)

Hours	MU Paid Employment	MU Leisure
1	80	90
2	75	85
3	70	80
4	65	75
5	60	70
6	55	65
7	50	60
8	45	55
9	40	50
10	35	45

hours working and hours leisure.

b) Unfortunately, Chika begins to realize that unless she gets an education she will not enjoy a high salary and therefore, will not be able to afford more leisure time. She therefore decides to spend six hours each day studying (in addition to her eight hours of sleep). How will she now divide the remaining hours between work and leisure?

_____ hours working and _____ hours leisure.

Answer rating: 100% (QA)

a To determine how Chika would allocate her sixteen waking hours in her ideal world we can analyze the marginal utility MU values for paid employment ... View the full answer