Llustrate what combination will maximize utility

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Reference no: EM1315445

Q. Robinson Crusoe can either fish (F) at a rate of 1 caught per 2 hours or pick Coconuts (C) at a rate of 1 picked per hour. He has 12 hours per day available for either activity. Elucidate his production possibilities. In this one person economy could this also be his budget line?

The table below Elucidates utility which Crusoe gets from consuming fish also coconuts.

Quantity of Fish Total Utility Quantity of Coconuts Total Utility
0 0 0 0
1 40 1 24
2 70 2 44
3 90 3 60
4 102 4 72
5 110 5 80
6 116 6 84
7 120 7 86
8 122 8 87
9 123 9 87
10 123 10 87
11 123 11 87
12 123 12 87

A. Compute marginal utilities.

B. Illustrate what combination of the two should he produce (acquire with his income) to maximize utility?

C. If due to over-harvesting of coconuts they become more difficult to acquire, taking 2 hours to pick one coconut, Illustrate what combination will maximize utility?

D. If it becomes easier to pick coconuts, specifically 2 can be picked per hour, Illustrate what combination will maximize utility?

E. Draw Crusoe's "demand" curve for coconuts as the "price" varies from 2 hours to 1 hour to 1/2 hour.

Reference no: EM1315445

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