Newspaper machines and soda vending machines operate very differently. The newspaper machine is a mechanical box. You place your four quarters in the machine and you open the door and low and behold there is a stack of newspapers at your disposal
Most people take one and close the door for the next patron to purchase his own copy. But notice that soda vending machines don't operate the same way. They are also mechanical but when the four quarters are inserted and a selection is made only one can of soda is available for the consumer to purchase. Explain in terms of marginal utility why these two machines are designed so differently?
The marginal utility of a second newspaper is most likely to be zero for most people. That is, the extra added satisfaction of acquiring a second newspaper is probably negligible. After all, it contains all of the same news as the first copy. However, the cans of cold beverage that remain in the soda machine still have positive marginal utility even though it may be less than the marginal utility of the first can. It pays for the vendor to design a machine that keeps the rest of the cans of soda away from those who might not be inclined to pay for the second can of soda.
You might also like to view...
If Country A's real GDP is growing at 6 percent per year and Country B's real GDP is growing at 6 percent per year, then the standard of living is
A) growing more rapidly in Country A. B) higher in Country B. C) changing at the same rate in Country A and Country B. D) growing more slowly in Country A. E) changing at the same rate in Country A and Country B only if the rate of population growth is the same in both countries.
The Oh So Humble Bakery sells 300 muffins at a price of $1 per muffin. Its explicit costs for producing 300 muffins are $250. The Oh So Humble Bakery's economic profits are
A. $35. B. $50. C. $250. D. indeterminate from this information.