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Use the concept of of diminishing marginal utility to explain why would be more likely...

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yaga49 | (Level 1) Valedictorian

Posted May 7, 2013 at 1:25 PM via web

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Use the concept of of diminishing marginal utility to explain why would be more likely to see an all you can eat pizza buffet rather than all you can carry sunglasses "buffet".

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 7, 2013 at 1:34 PM (Answer #1)

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The concept of diminishing marginal utility says that, for most goods and services, the utility I get from consuming one more unit of the product will decrease as I consume more of them.  For example, let us say that I live somewhat far from my work and from other places that I need to go.  I live alone.  I get places by bike or by bus.  If I get a car, that gives me a lot of utility because it helps me get places much more quickly and with less effort.  But if I buy a second car, that really does me little marginal good.  I can’t drive both of them at once.

This is why food can be presented in buffets but sunglasses would not work.  If I am very hungry, I might want to eat a lot of pizza.  After my first slice, I would still be hungry and I would still get a lot of marginal utility from a second slice.  Depending on how hungry I was, I might continue to get a lot of marginal utility up to my 5th or 6th slice.  By contrast, I can only wear one pair of sunglasses at once.  After the first pair, I am going to get very little marginal utility out of more sunglasses.

Thus, we see that marginal utility for sunglasses goes down very far immediately after the first unit consumed while that for pizza does not.  That is why, from a consumer’s point of view, a pizza buffet makes sense and a sunglasses buffet does not.

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