Markets &

Economies
Practice Set

Optimizing Olivia’s Options

Olivia Pluton-Swan is a fitness fanatic. She wants to play as much Disc Golf and take as
many Zumba classes as she can handle, but she has a problem: limited funds. She’s
worked out that she can afford to devote AUD $108 to getting physical every week.
One hour of Disc Golf and one Zumba class each cost $18 each.

Olivia’s preference for Disc Golf and Zumba can be expressed in the following marginal
utility (MU) schedule:

Disc Golf Zumba

Units MU MU
1 108 120
2 90 100
3 72 80
4 54 60
5 36 40
6 27 20

© 2021 Pedago, LLC. All rights reserved. 6/23/21

Markets & Economies Group Task

Questions for Discussion

1. How should Olivia allocate her weekly budget so as to maximize her utility?

2. How can you verify whether the marginal utility per dollar of each option is the
same at the utility-maximizing bundle?

3. Good news! Olivia’s local Disc Golf club offers a 50% discount on sessions. How
does this affect Olivia’s utility maximizing bundle? How many Zumba classes and
Disc Golf sessions should she sign up for now?

4. Draw Olivia’s demand curve for Disc Golf and describe three price/quantity
combinations.

© 2021 Pedago, LLC. All rights reserved. 9/10/21

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