Terry attends college and works part-time in a drug store. She can work up to 40 hours each week and is paid $9 per hour. The following table shows her utility from different levels of leisure and income. Hours of LeisureTotal Utility from LeisureMarginal Utility of LeisureWork HoursIncomeTotal Utility from IncomeMarginal Utility from Income518054535010343.21090590.5315482.815135770.420561.620180860.225600.825225920.133065130270980.1335690.8353151030.1140720.6403601070.03 Terry decides to increase her work hours from 20 to 25 hours per week. What would be her marginal utility loss from having less leisure time? 6What would be her marginal utility gain from having an additional income? 13What will be her total utility from both leisure and income when working 25 hours per week? 140 Does it make sense from the perspective of utility for Terry to increase her work hours? (Think about the total utility calculations.). Why or Why not?

In the study of economics, the term utility can be defined as the total satisfaction or benefit that…

Answered: Terry attends college and works…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Terry attends college and works part-time in a drug store. She can work up to 40 hours each week and is paid $9 per hour. The following table shows her utility from different levels of leisure and income.

Hours of Leisure	Total Utility from Leisure	Marginal Utility of Leisure	Work Hours	Income	Total Utility from Income	Marginal Utility from Income
5	18	0	5	45	35	0
10	34	3.2	10	90	59	0.53
15	48	2.8	15	135	77	0.4
20	56	1.6	20	180	86	0.2
25	60	0.8	25	225	92	0.13
30	65	1	30	270	98	0.13
35	69	0.8	35	315	103	0.11
40	72	0.6	40	360	107	0.03

Terry decides to increase her work hours from 20 to 25 hours per week.

What would be her marginal utility loss from having less leisure time? 6
What would be her marginal utility gain from having an additional income? 13
What will be her total utility from both leisure and income when working 25 hours per week? 140
Does it make sense from the perspective of utility for Terry to increase her work hours? (Think about the total utility calculations.). Why or Why not?

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