Bruce works for a large bank. His wage increased from $30 per hour to $40 per ho

Question

Bruce works for a large bank. His wage increased from $30 per hour to $40 per hour. He can work up to 50 hours each week. The table below shows his utility from different levels of leisure and income. If Bruce decides to increase his weekly hours of work from 10 to 20 hours after his raise, the marginal utility loss from having less leisure is:

Please show work

A-13

B-8

C-27

D-21

hours of leisure Total Utility from Leisure Income total Utility from Income 0 0 0 0 10 29 300 40 20 54 400 72 30 73 600 96 40 86 800 108 50 92 900 116 1200 120 1500 122 1600 124 2000 125

Explanation / Answer

Weekly hours of leisure = 50 - weekly hours of work

So, when number of work hours = 10, number of hours of leisure = 40

when number of work hours = 20, number of hours of leisure = 30

So, increase in weekly work hours from 10 to 20 is equvalent to decrease in leisure hours from 40 to 30.

Loss in marginal utility = 86 - 13 = 13

Correct option (A)

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