I currently have a table like so:
Hours spent on Activity X | Total Utility
- 120
- 220
- 300
- 360
- 396
- 412
I know that Marginal Utility is calculated use slope formulate (delta Y / delta X). I am asked to calculate the MU for 5 hours: So in this case, $delta X = 5 - 1 = 4$ and $deltaY = 396 - 120 = 276$ Then, MU = $deltaY/deltaX = 276/4 = 69$
Next I am supposed to calculate the MU per dollar, which is determined by: $deltaY/deltaX * 1/Price$ . The question states the price of activity X is $5/hour.
Then, I would have $MU per dollar = 69/5 = 13.8$ This gives me 13.8 dollars as the MU per dollar, however, the answer to this question is 7.2 dollars. Can anyone please explain where I've gone wrong?
Actually you are calculating MU wrong $$\frac{\Delta Y}{\Delta X}=\frac{Y_5-Y_4}{X_5-X_4}=\frac{396-360}{5-4}=36$$ $$\Rightarrow \text{MU}_\text{per dollar}=36/5=7.2$$