Question

WITH STEP AND HOW YOU SOLVE IT PLEASE !

Max enjoys windsurfing and snorkeling. Max can either rent windsurfing or snorkeling equipment for a fixed price per hour. The table below shows the total utility Max gets from each activity. Max has a budget of 40$ and windsurfing costs 10$ per hour and snorkeling costs 5$ per hour.

1. Calculate Max marginal utility from windsurfing at each number of hours per day and calculate Max’s marginal utility from snorkeling at each number of hours per day.
2. Calculate Max’s marginal utility per dollar from windsurfing at each number of hours per day and calculate Max’s marginal utility per dollar from snorkeling at each number of hours per day.

Hours per day	Total utility from windsurfing	Marginal utility from windsurfing	Marginal utility per dollar windsurfing	Total utility from snorkeling	Marginal utility from snorkeling	Marginal utility per dollar snorkeling
0	0	-	-	0	-	-
1	120			80
2	220			150
3	300			210
4	360			260
5	396			300
6	412			330
7	422			350
8	424			360

1. In the table below, fill in the combinations of snorkeling and windsurfing that exhausts Max’s budget and fill in the marginal utilities per dollar.
2. How many hours does Max windsurf and how many hours does he snorkel to maximize his utility?

Consumption possibilities	Windsurfing (hours)	Snorkeling (hours)	Marginal utility per dollar windsurfing	Marginal utility per dollar snorkeling
A
B
C
D
E

Answer 1

The marginal utility is change in total utility by consuming one more unit of a commodity. It can be calculated as: TU​​​​​n  - TU​​​​​n-1 .

The margin utility of money is calculated as MU/ price of each unit.

Thus MU​​​​​m for windsurfing is MU/ 10 and for snorkelling is MU/5.

The equation for exhausting Max's budget is 10x + 5y = 40. Here 10 is price of windsurfing and x is units of windsurfing, 5 is price of snorkelling and y is units of snorkelling and 40 is his total income.

The different consumption possibilities can be calculated by putting different values for x =1,2,3.... And corresponding values of y. The MU​​​​​m corresponding to these units is taken from the above table already calculated.