Calculate Jacks marginal utility for both activities

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Reference no: EM133042742

BUS 201 Microeconomics - Emirates College of Technology

Question 1.

The following table is a demand and a supply schedule for pens.

Price AED	Quantity Demanded Per day	Quantity Supplied Per day
1	28	4
2	24	8
3	20	12
4	16	16
5	12	20

Using the table above, respond to the following:

1. Plot the demand and supply curves for the pens market and label the axis and each curve. On the graph show the equilibrium point.

2. Determine the equilibrium price and quantity

3. At the equilibrium price, is there a surplus or shortage and how much is it.

4. At price AED 3,describe the situation of the market and show it on the figure.

5. From question 4 above, how much is this surplus or shortage?

6. In this case, will the price increase or decrease?

Question 2.

Suppose that Jack has a budget of $35 to spend on swimming and playing music. The price of one hour swimming is $10 and for playing music is $5 an hour. The table shows the total utility Jack gets from each activity.

	Total utility from swimming	Marginal utility	Marginal utility per dollar	Total utility from playing music	Marginal utility	Marginal utility per dollar
Hours per day	Total utility from swimming	Marginal utility	Marginal utility per dollar	Total utility from playing music	Marginal utility	Marginal utility per dollar
1	120			40
2	220			76
3	300			106
4	360			128
5	396			140
6	412			150
7	422			158

1. Calculate Jack's marginal utility for both activities.
2. Does Jack's marginal utility from swimming and playing music follow the principle of diminishing marginal utility. Explain
3. Which does Jack enjoy more: his 3rd hour of swimming or his 3rd hour of playing music?
4. Calculate marginal utility per dollar for each activity.
5. To maximize his utility, how many hours a day does Jack spend on each activity, explain your answer.

Question 3:
Explain the effects of covid 19 pandemic on the two market forces: supply and demand.

Reference no: EM133042742

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