Suppose some friends of Ali call to say they are having a party tonight. Ali calculates that the party is now his best alternative to study, and he increases his estimate of the cost of each hour of study. One hour of study now costs 70; two hours cost 140; three hours 210, four hours 280; five hours 350; and six hours 470. a) Draw the Total and marginal Utility curves for Ali’s study hours. b) Based on the marginal decision rule, identify the solution that maximizes the net benefit of study time.
Suppose some friends of Ali call to say they are having a party tonight. Ali calculates that the party is now his best alternative to study, and he increases his estimate of the cost of each hour of study. One hour of study now costs 70; two hours cost 140; three hours 210, four hours 280; five hours 350; and six hours 470. a) Draw the Total and marginal Utility curves for Ali’s study hours. b) Based on the marginal decision rule, identify the solution that maximizes the net benefit of study time.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose some friends of Ali call to say they are having a party tonight. Ali calculates that the party is now his best alternative to study, and he increases his estimate of the cost of each hour of study. One hour of study now costs 70; two hours cost 140; three hours 210, four hours 280; five hours 350; and six hours 470.
- a) Draw the Total and
marginal Utility curves for Ali’s study hours. - b) Based on the marginal decision rule, identify the solution that maximizes the net benefit of study time.
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