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Econ 110
Selected Questions From Chapter 8  UTILITY AND DEMAND
1.
Max enjoys windsurfing and snorkeling. The table shows the total utility he gets from each
activity.
a.
Find Max’s marginal utility from windsurfing at
each number of hours per day.
Max’s marginal utility from windsurfing 1 hour
per day is 120; from windsurfing 2 hours per
day is 100; from windsurfing 3 hours per day
is 80; from windsurfing 4 hours per day is 60;
from windsurfing 5 hours per day is 36; from
windsurfing 6 hours per day is 16; and, from
windsurfing 7 hours per day is 10.
b.
Find Max’s marginal utility from snorkeling at
each number of hours per day.
Max’s marginal utility from snorkeling 1 hour per day is 40; from 2 hours per day is 36; from
snorkeling 3 hours per day is 30; from snorkeling 4 hours per day is 22; from snorkeling 5
hours per day is 12; from snorkeling 6 hours per day is 10; and, from snorkeling 7 hours per
day is 8.
c.
Do Max’s marginal utility from windsurfing and from snorkeling obey the principle of
diminishing marginal utility?
Max’s marginal utility from windsurfing and from snorkeling both obey the principle of
diminishing marginal utility because both decrease as the consumption increases.
d.
Which does Max enjoy more: his 6th hour of windsurfing or his 6th hour of snorkeling?
Max’s marginal utility from his 6th hour of windsurfing is 16 and his marginal utility from his
6th hour of snorkeling is 10. Max enjoys his 6th hour of windsurfing more than his 6th hour
of snorkeling.
2.
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.
The table is to the right.
b.
In your table, add two columns and
list Max’s marginal utility per dollar
from windsurfing and from
Hours
per day
Total utility
from
windsurfing
Total utility
from
snorkeling
1
120
40
2
220
76
3
300
106
4
360
128
5
396
140
6
412
150
7
422
158
Hours
windsurfing
Marginal
utility per
dollar from
windsurfing
Hours
snorkeling
Marginal
utility per
dollar from
snorkeling
3
8.0
1
8.0
2
10.0
3
6.0
1
12.0
5
2.4
0
7
1.6
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snorkeling.
The columns are in the table.
c.
How long does Max spend windsurfing and how long does he spend snorkeling to maximize
his total utility?
To maximize his utility, Max windsurfs for 3 hours and snorkels for 1 hour.
Max uses his $35 so that all of the $35 is spent and so that the marginal utility per dollar
from each activity is the same. When Max windsurfs for 3 hours and snorkels for 1 hour, he
spends $30 renting the windsurfing equipment and $5 renting the snorkeling equipment—a
total of $35.
The marginal utility from the third hour of windsurfing is 80 and the rent of the windsurfing
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 Spring '11
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 Utility

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