Max in problem 1 has $35 a day to spend, and he can spend as much time as he likes on his leisure pursuits. Windsurfing equipment rents for $10 an hour, and snorkeling equipment rents for $5 an hour. 

  

a. Make a table that shows the various combinations of hours spent windsurfing and snorkeling that Max can afford. 

  

b. In your table, add two columns and list Max’s marginal utility per dollar from windsurfing and from snorkeling. 

  

c. How long does Max spend windsurfing and how long does he spend snorkeling to maximize his total utility? 

  

d. If compared to c, Max spent a dollar more on windsurfing and a dollar less on snorkeling, by how much would his total utility change? 

  

e. If compared to e, Max spent a dollar less on windsurfing and a dollar more on snorkeling, by how much would his total utility change? 

  

f. Explain why, if Max equalized the marginal utility per hour from windsurfing and from snorkeling, he would not maximize his utility. 

Transcribed Image Text:

Total utility from windsurfing Total utility from snorkeling Hours per day 1 120 40 76 106 2 220 300 3 4 360 128 396 412 422 140 6. 7 150 158 Total utility from windsurfing Total utility from snorkeling Hours per day 1 120 40 76 106 2 220 300 3 4 360 128 396 412 422 140 6. 7 150 158

Answer rating: 100% (QA)

a Hours windsurfing Marginal utility per dollar from windsurfing Hours snorkelling Marginal utility per dollar from snorkelling 3 80 1 80 2 100 3 60 1 ... View the full answer