Olivia is a student at Boston University. She has 5 hours to study for 2 exams. The tables below show Olivia's expected scores given the amount of time she has to study. Hours Spent Studying Finance Expected Score on Finance Exam 5 4 3 2 1 0 100 96 90 B I 82 60 0 Hours Spent Studying English Expected Score on English Exam 0 1 2 3 4 5 0 40 60 72 77 80 A. Olivia spends 3 hours studying finance and 2 hours studying English. Calculate her gain from the second hour spent studying English. B. Calculate Olivia's opportunity cost of the second hour studying English. C. Assume Olivia increases the time she spends studying English. What happens to the opportunity cost of studying English? Explain. D. Assume that Olivia has the goal of maximizing her total scores on both exams (Finance plus English). How many hours should she study for each exam? E. Olivia learns that her marching band practice has been cancelled, freeing up an additional hour for studying. Given your answer to Part D, will Olivia allocate the additional hour to studying finance or English to maximize the sum of her test scores? Explain, using marginal analysis.

Olivia is a student at Boston University. She has 5 hours to study for 2 exams. The tables below show Olivia's expected scores given the amount of time she has to study. Hours Spent Studying Finance Expected Score on Finance Exam 5 4 3 2 1 0 100 96 90 B I 82 60 0 Hours Spent Studying English Expected Score on English Exam 0 1 2 3 4 5 0 40 60 72 77 80 A. Olivia spends 3 hours studying finance and 2 hours studying English. Calculate her gain from the second hour spent studying English. B. Calculate Olivia's opportunity cost of the second hour studying English. C. Assume Olivia increases the time she spends studying English. What happens to the opportunity cost of studying English? Explain. D. Assume that Olivia has the goal of maximizing her total scores on both exams (Finance plus English). How many hours should she study for each exam? E. Olivia learns that her marching band practice has been cancelled, freeing up an additional hour for studying. Given your answer to Part D, will Olivia allocate the additional hour to studying finance or English to maximize the sum of her test scores? Explain, using marginal analysis.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 17.1IP

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