Gabriella often faces a trade-off between time at the beach and time working as a model.She earns $40 per hour as a model and values going to the beach at the same price.When explaining this to her parents, she says, "The marginal utility per hour working is the same as the marginal utility of going to the beach." This is an illustration of which concept?

Question

Quizplus · Accepted Answer

Gabriella is facing a trade-off between two choices and must allocate her time optimally between them. She values both choices equally, so the marginal utility per hour of each activity is the same. Therefore, the best choice for Gabriella is to allocate her time between the two activities to maximize total utility, which is the concept of optimal time allocation.

Gabriella Often Faces a Trade-Off Between Time at the Beach