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Homework203__1

Homework203__1 - Explain d How will you allocate your time...

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Economics 203- HW#1 Course ID_____________________ Due: Thursday, January 27 th (in class!) Section # _____________________ 1. Explain the fundamental concept of economics. Define opportunity cost. Give a personal example. 2. Fill in the blanks in the table below and answer the question to follow. Pizza Slices Marginal Utility (MU) Total Utility (TU) 1 32 __________ 2 28 __________ 3 ___________ 81 4 11 __________ 5 ___________ 92 6 -6 ______ _ ____ When should this individual stop eating pizza? Explain your answer. 3. The following diagram is taken from page 17 Fig 2.3.3 of your text. The diagram shows three activities you can spend your time doing. Utils Utils MU Activity 1 Units Figure 2.3.3 - MU's from three different way to spend time Utils Units Units MU MU Activity 2 Activity 3 Refer to the diagram above to answer the questions a.-d. a. Which activity is initially more satisfying and why?

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b. Comparing Activity 1 and Activity 2, which is more sustainable overtime and why? c. How will you allocate your time between the three activities if your time is not scarce?
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Unformatted text preview: Explain. d. How will you allocate your time between the three activities if your time is scarce? Explain. 4. Suppose John calculates his marginal utility for each hour he spends on his favorite activities: video games, basketball and studying. The table below provides the results. John’s Marginal Utility (MU) for Each Hour Spent on Weekend Activities (Total Utility in Parentheses) Hours Spent MU Video Games MU Basketball MU Studying 1 165 (165) 190 (190) 99 (99) 2 123 (288) 182 (372) 84 (183) 3 70 (358) 167 (539) 70 (253) 4 18 (376) 143 (682) 32 (285) 5 0 (376) 111 (793) 0 (285) 6-10 (366) 70 (863)-8 (277) 7 -32 (334) 25 (888)-15 (262) a. Suppose John has 12 hours to spend on his three activities. How should John allocate his time in order to maximize his total utility? b. Suppose John has 14 hours to spend on his three activities. How should John allocate his time in order to maximize his total utility?...
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