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Problem 1 [Parkin] Chapter 8, page 240 Max has $35 a day to spend on windsurfing and snorkeling and he can spend as much time as he likes doing them. The price of renting equipment for windsurfing is $10 an hour and for snorkeling is $5 an hour. The table shows the total utility Max gets from each activity. 3. Calculate Max's marginal utility from windsurfing 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 at each number of hours per day. Does Max's marginal utility from windsurfing obey the principle of diminishing marginal utility? 4. Calculate Max's marginal utility from snorkeling at each number of hours per day. Does Max's marginal utility from snorkeling obey the principle of diminishing marginal utility? 5. Which does Max enjoy more: his 6th hour of windsurfing or his 6th hour of snorkeling? 6. Make a table of the combinations of hours spent windsurfing and snorkeling that Max can afford. 7. Add two columns to your table in Problem 6 and list Max's marginal utility per dollar from windsurfing and from snorkeling. 8. a. To maximize his utility, how many hours a day does Max spend on each activity? b. If Max spent a dollar more on windsurfing and a dollar less on snorkeling than in part (a), how would his total utility change? 12. If Max's income increases from $35 to $55 a day, how does his demand for rented windsurfing equipment change? Is windsurfing a normal good? Explain.

Problem 1 [Parkin] Chapter 8, page 240
Max has $35 a day to spend on windsurfing and
snorkeling and he can spend as much time as he
likes doing them. The price of renting equipment
for windsurfing is $10 an hour and for snorkeling is
$5 an hour. The table shows the total utility Max
gets from each activity.
3. Calculate Max's marginal utility from windsurfing
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
at each number of hours per day. Does Max's marginal utility from windsurfing obey the principle
of diminishing marginal utility?
4. Calculate Max's marginal utility from snorkeling at each number of hours per day. Does
Max's marginal utility from snorkeling obey the principle of diminishing marginal utility?
5. Which does Max enjoy more: his 6th hour of windsurfing or his 6th hour of snorkeling?
6. Make a table of the combinations of hours spent windsurfing and snorkeling that Max
can afford.
7. Add two columns to your table in Problem 6 and list Max's marginal utility per dollar
from windsurfing and from snorkeling.
8. a. To maximize his utility, how many hours a day does Max spend on each activity?
b. If Max spent a dollar more on windsurfing and a dollar less on snorkeling than in part (a), how
would his total utility change?
12. If Max's income increases from $35 to $55 a day, how does his demand for rented windsurfing
equipment change? Is windsurfing a normal good? Explain.

Added by Logan R.

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