Homework Sourseconsider the following table showing the utility of differen
consider the following table showing the utility of different numbers of days skied each year
construct a table showing the marginal utility for each day of skiing. assuming that there are ! million people with preferences shown in the table, draw the market demand curve for ski days. if lift tickets cost $40 per day, what are the equilibrium price and quantity of days skied?
| number of skied | total utility ($) |
| 0 | 0 |
| 1 | 70 |
| 2 | 110 |
| 3 | 146 |
| 4 | 176 |
| 5 | 196 |
| 6 | 196 |
Solution
Consumer strikes his equilibrium when MU = P
[MU= Marginal utility and P = Price ]
At Number of skied = 2 , MU (40) = P (40), therfore, consumer equilibrium is achieved. Equilibrium price = $ 40 (lift tickets cost $40 per day) and Equilibrium quantity = 2.
Conclusion:-
| Number of skied | Total utility ($) | Marginal Utility ($) |
| 0 | 0 | 0 |
| 1 | 70 | 70 = (70 - 0) |
| 2 | 110 | 40 = (110 -70) |
| 3 | 146 | 36 = (146 -110) |
| 4 | 176 | 30 = (176 -146) |
| 5 | 196 | 20 = (196 - 176) |
| 6 | 196 | 0 = (196 - 196) |
