Name ______Ms. Person
________________ Block___________ Date ____________
Marginal analysis of laundry and castaways
AP Micro / Ms. Person
1. Using marginal analysis, calculate how many times per week Katie will do her laundry in college based on the
following facts:
A wash costs Katie $2 but she can dry them for free. All of her clothes fit in one load of laundry.
Katie must give up 30 total minutes of time to access the machines, operate the washer and dryer, fold clothes,
and put them away. (She can do other things – like study – while the machines operate.)
Katie could tutor for an additional 30 minutes if she is not doing laundry. The going rate for tutors is $10/hour.
Katie values clean clothes as indicated in the table below (benefit expressed in dollars).
A. What is the marginal cost to Katie of each wash? Does it remain constant?
$2 + $5 (giving up ½ hour of tutoring) = $7. Yes, because each additional wash costs her $7, and marginal
means additional (as in, how much or how many).
Complete the marginal cost column. Done
B. Using the total benefit information, calculate the marginal benefit of each wash and complete the marginal
cost column. Done – Keep in mind that marginal means additional. So be careful not to confuse total and
marginal benefit.
C. Katie should do one more wash when what rule applies? MB=MC (or MB≥MC)
D. How many times per week will Katie wash her laundry? 3 times, because $9 additional benefit is greater
than $7 cost of the third time, but the fourth wash only brings her $5 of benefit but has $7 of cost.
Washes per week
Zero washes
1st wash
2nd wash
3rd wash
4th wash
Total benefit
$0
$15
$28
$37
$42
Marginal benefit
Marginal cost
-
-
$15
$7
$13
$7
$9
$7
$5
$7
(over, please)
2. In the novel Robinson Crusoe, the main character is stranded on an island.
A. In general terms, how does the definition of economics relate to the challenges Robinson faces involving the
resources available on the island?
Scarcity – scarce resources in comparison with what he wants
Assume that the following table lists the enjoyment that Robinson receives from picking and eating raspberries.
B. As he picks and eats more raspberries, what happens to his total satisfaction level?
It goes up but then levels off. Eventually he stops enjoying raspberries as much. (NOTE: this question does
NOT have to do with his cost. When you consider benefit, focus on benefit. When you consider cost, focus
on cost.)
C. Robinson doesn’t have to pay money for his fruit. Does that mean he gets a free lunch? If not, how would
you measure the cost of Robinson of picking raspberries?
Nope – use opportunity cost – what does he have to give up? Time to do other things, etc…
D. Assume that for Robinson, the opportunity cost of the time it takes to pick each handful of 10 raspberries is
2 utils. How many raspberries should Robinson pick and eat? (Hint: You’ll need to calc MB and MC.)
Calculated above. He should pick and eat 60 raspberries.