Participate in a discussion with your classmates regarding the choices people ma
ID: 1226934 • Letter: P
Question
Participate in a discussion with your classmates regarding the choices people make as described in marginal utility theory. Review the “EYE on YOUR LIFE” caption titled “Do You Maximize Your Utility?” on page 332 in the textbook. Marginal utility is the change in total utility that results from a one-unit increase in the quantity of a good consumed; diminishing marginal utility is the general tendency for marginal utility to decrease as the quantity of a good consumed increases. As we’re well aware, vending machines are used to sell snacks and beverages, whereas, newspapers are sold out of a box which allows anyone to take more than one paper. If snacks and beverages were sold using a newspaper style box, would some people take more than they paid for? Consider whether this sales technique is related to the marginal utility analysis. That is, when people don’t take more than one newspaper out-of-the box, does this mean that the marginal utility of a newspaper diminishes so rapidly that there’s little concern that people will take more than one newspaper? Post and continue this discussion regarding the snacks/beverages versus newspaper sales techniques and expand your discussion to include the benefits that a person gets from consuming other goods and services. Please apply the marginal utility and diminishing marginal utility analysis concepts when posting your discussion.
Explanation / Answer
Definitely yes.
This is because the marginal utility received from consuming an additional unit of snacks or beverage will be much greater than the marginal cost of obtaining them (which is basically zero in this case).
Thus, going by marginal utility analysis, a people will always take more than they paid for in case of snacks.