Louisa works for a hedge fund company her wages increased from $30 per hour to $

Question

Louisa works for a hedge fund company her wages increased from $30 per hour to $40 per hour. She can work up to 50 hours each week. The table below shows her utility from different levels of leisure and income. Louisa decided to increase her hours of work from 10 to 20 hours per week after receiving her raise. As a result, her marginal utility gain from having more income will now be:

a. 74

b. 36

c. 12

d. 13

Hours of Leisure Total Utility from Leisure Income Total Utility from Income 0 0 0 10 27 300 42 52 400 74 20 30 71 600 98 84 800 110 40 50 90 118 1200 122 1500 124 1600 126 2000 127

Explanation / Answer

Marginal utility from having more income will now be 36.

thus, the option B is correct.

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