Diminishing Marginal Utility: Pretend You Have Just Been

Diminishing Marginal Utility1 Pretend That You Have Just Been

Topic: Diminishing Marginal Utility 1. Pretend that you have just been surprised with a genuine email that says you have just been selected by your favorite pizza delivery company that every day for the next month you will receive your favorite pizza for lunch and another of that same favorite pizza for dinner, delivered to your home and ready to eat. a. Using the concept of diminishing marginal utility, discuss how excited you will be on the first day of your winning. b. What about your excitement on the 10th day? c. What about your excitement on the 30th day?

2. Now, pretend that your favorite national brand gasoline company informs you that you have won as much as you want free gasoline, as much as you want, from any of their gas stations, anywhere in the country every day for a year. a. Using the concept of diminishing marginal utility, discuss how excited you will be on the first day of your winning. b. What about your excitement on the 10th day? c. What about your excitement on the 30th day?

3. Again, considering the concept of utility, what makes these two scenarios different? WK 5 DQ 1 Analyze the challenges that organizations face in the effective transition between selling products using the traditional brick and mortar marketing channel and selling products online. Synthesize the strategies that organizations like Zara and Wal-Mart- two companies that are having difficulty developing eCommerce capability can implement to increase the effortless movement of customers between the traditional and online channels. What are the benefits and limitations of selling through a store front and online?

Paper For Above instruction

The concept of diminishing marginal utility plays a pivotal role in understanding consumer behavior, particularly in scenarios involving repeated consumption of the same good or service. It asserts that as an individual consumes more units of a good or service, the additional satisfaction or utility gained from consuming each subsequent unit decreases. This principle can be effectively applied to analyze consumer excitement and utility derived from winning various benefits, such as free pizza or gasoline, over time.

In the first scenario, where an individual receives their favorite pizza daily for lunch and dinner for a month, their initial excitement on the first day is likely to be extremely high. The anticipation and novelty of receiving free, favorite pizza each day create a state of heightened happiness. According to the law of diminishing marginal utility, however, the excitement or satisfaction from each additional day of receiving the same pizza diminishes gradually. By the 10th day, the individual's enthusiasm may have lessened, as the novelty wears off, and the repeated experience becomes somewhat routine. The hunger and craving are still met, but the emotional intensity associated with the surprise diminishes over time.

By the 30th day, the anticipation and excitement might significantly decline. The consumer might feel less enthusiastic about the daily deliveries, perceiving them as routine or even monotonous. The diminishing utility reflects a reduced emotional response, and the individual might start to take the free pizzas for granted or expect them as a normal part of their daily routine. This phenomenon illustrates the practical implications of diminishing marginal utility in consumer satisfaction—initial gains are high, but the long-term utility diminishes as the consumption or repeated exposure continues.

The second scenario involves winning unlimited free gasoline from a national brand for a year. On the first day, the individual’s excitement would be tremendous, primarily because access to unlimited free fuel alleviates a significant cost concern and provides immediate financial relief. The utility gained from initial free gasoline is high, leading to feelings of gratitude and happiness. However, similar to the first scenario, the principle of diminishing marginal utility applies. Over time, as the individual refuels multiple times, the excitement diminishes, because the utility of free gasoline becomes a routine benefit rather than a novel or highly valued experience.

By the tenth day, the initial thrill could be largely replaced by routine, as the individual no longer perceives free gasoline as a special or unique benefit but as an expected norm. Daily refueling becomes a mundane activity, reducing the emotional and psychological impact. By the 30th day, the excitement may have nearly vanished, and the person might view the free gasoline as simply part of their regular expenses, with little emotional significance attached to it. This decline exemplifies how the utility derived from an ongoing benefit diminishes over time, aligning with the law of diminishing marginal utility and emphasizing the importance of novelty and surprise in maintaining high consumer satisfaction.

What distinguishes these two scenarios primarily revolves around the type of good involved and the context in which utility is derived. In the pizza example, the utility is tied to immediate gratification and sensory satisfaction, which can be contrasted with gasoline, a utility resulting more from the relief from cost and economic benefit. Additionally, in the case of food, the pleasure might be more transient and tied to individual taste preferences, whereas gasoline utility is linked to essential transportation needs. Over time, the diminishing utility in both cases demonstrates that repetitive access to the same good reduces emotional impact, but the nature of satisfaction varies based on the type of good, its usage, and the consumer’s perception of its value over time.

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