Question

Assume for this question that time represents price. Adam has determined that riding his bike in the morning will give him 300 additional utils of satisfaction and take 40 minutes. On the other hand, he has determined that jogging will give him 250 additional utils of satisfaction and takes 35 minutes. Given this information, Adam will be increasing his happiness by biking instead of jogging.True / False.

Answer 1

Answer:

The correct answer is: false.

Explanation:

In this question, time represents price.

For Adam, riding his bike takes 40 minutes and gives additional satisfaction of 300 units.

While jogging will give him 250 additional utils of satisfaction and takes 35 minutes.

The ratio of marginal utility and time for biking

= $\frac{300}{40}$

= 7.5

The ratio of marginal utility and time for jogging

= $\frac{250}{35}$

= 7.14

The ratio is greater for biking, this means that Adam will be increasing his satisfaction level by jogging instead of biking.