Suppose That Melissa Spends Recreation Time and Money on Two

question 135

Essay

Suppose that Melissa spends recreation time and money on two leisure activities: Tennis and fishing. The cost per hour of tennis (court fees) and per hour of fishing (boat rentals) is $4. The table below shows the total utility that Melissa derives from the two activities. $\begin{array} { c c c c c c } \hline & \text { Tennis } & & { \text { Fishing } } \\\hline \begin{array} { c } \text { Number } \\\text { Of Hours }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Marginal } \\\text { Utility }\end{array} & \begin{array} { c } \text { Number of } \\\text { Hours }\end{array} & \text { Total Utility } & \begin{array} { c } \text { Marginal } \\\text { Utility }\end{array} \\1 & 20 & & 1 & 31 & \\2 & 39 & & 2 & 58 & \\3 & 57 & & 3 & 79 & \\4 & 74 & & 4 & 94 & \\5 & 89 & & 5 & 101 & \\6 & 102 & & 6 & 102 & \\\hline\end{array}$ a) Complete the columns of marginal utilities.
b) Assume that Melissa has a budget of $20. To maximize her total utility, how much would she allocate her spending between the two activities? What is the resulting total utility?
c) At the end of the day, Melissa digs deep in her pocket and discovers an extra $4. If she allocates this additional spending between the two activities so as to maximize her total utility, what will be the final totals?
d) Suppose that Melissa's utility from the two activities remains unchanged the next day, when she arrives with $20 in her pocket. To her pleasure, she discovers that the hourly charge on court fees has decrease to $3. How will she allocate her expenditures in order to maximize her total utility?

---

Definitions:

Mixed Blessing

A situation or event that has both positive and negative aspects.

Double Approach/Avoidance Conflict

A psychological conflict that arises when a person is faced with a decision involving both desirable and undesirable aspects of two conflicting goals.

Locus Of Control

A mental construct denoting how much people think they possess the power to influence occurrences that impact their existence.

Optimist

An individual who tends to be hopeful and confident about the future or the success of something.