MARGINAL UTILITY ANALYSIS Two friends are at a theme park and deciding how much to spend on two rides. John enjoys both
Posted: Wed Jul 06, 2022 6:33 pm
- Marginal Utility Analysis Two Friends Are At A Theme Park And Deciding How Much To Spend On Two Rides John Enjoys Both 1 (294.01 KiB) Viewed 29 times
MARGINAL UTILITY ANALYSIS Two friends are at a theme park and deciding how much to spend on two rides. John enjoys both rides. This is reflected in the high level of marginal utilities he receives from each. Nazar gets a great deal of enjoyment from the Ferris wheel but is less certain about the roller coaster. Each ride on the roller coaster costs $5 and for the Ferris wheel, $2. John has $22 to spend on rides, while Nazar's budget is $15. The following table shows their respective enjoyment of each turn on both rides. This table shows the marginal utility of each additional ride, not the utility-per-dollar. Times on Ride 1 2 3 4 5 6 John's M.U. Coaster 40 30 20 15 10 5 D FE Wheel 12 10 8 NAO) 6 4 2 Nazar's M.U. Coaster Wheel OGBGB8 40 20 15 10 DHZOB co 16 14 12 10 8 6 How will each of them allocate their funds? How is total utility calculated? In terms of their utility, which of them enjoyed the park more, and by how much?