While Eating At Alex's Pizza By The Slice Restaurant Kara Ex

While Eating At Alexs Pizza By The Slice Restaurant Kara Experienc

While eating at Alex's "Pizza by the Slice" restaurant, Kara experiences diminishing marginal utility. She gained 10 units of satisfaction from her first slice of pizza consumed, and would only receive 5 units of satisfaction from consuming a second slice. Based on this information we can conclude that: A) Alex may have to lower the price to convince Kara to buy a second slice B) Kara will not eat a second slice, even if it is given to her at no charge. C) Kara will definitely want to buy a second slice of pizza. D) even if Kara buys a second slice, she will not buy a third slice.

Paper For Above instruction

The scenario provided exemplifies a fundamental concept in economics known as diminishing marginal utility, which states that as a consumer increases the quantity of a good consumed, the additional satisfaction gained from each additional unit tends to decrease. In this case, Kara’s satisfaction from her first slice of pizza is 10 units, which diminishes to 5 units for the second slice. This decline indicates that the marginal utility of each subsequent slice of pizza decreases as she consumes more, aligning with economic theory.

Understanding this principle is crucial for analyzing consumer behavior and making practical pricing strategies. The law of diminishing marginal utility suggests that consumers are less willing to pay a high price for additional units of a good once their satisfaction from those units decreases. This helps explain why, after the first slice of pizza, Kara derives only half the satisfaction—indicative of the diminishing utility—and implies that her willingness to pay for the second slice would be lower than for the first. Consequently, businesses like Alex's Pizza might consider lowering prices for additional slices to entice customers to purchase more when their marginal utility decreases, aligning pricing strategies with consumer preferences.

Evaluating the answer choices based on the information provided, Option A states that Alex may need to lower the price to motivate Kara to buy a second slice. This aligns with economic principles, as lower marginal utility typically reduces willingness to pay, thus making discounts or lower prices effective incentives. On the other hand, Option B claims Kara will not eat any more slices regardless of the price, but the data does not support this strongly because her marginal utility is still positive, just decreasing. Therefore, she might still purchase a second slice if the price is sufficiently attractive.

Option C claims that Kara will definitely buy a second slice, which is an overgeneralization. The decrease in marginal utility suggests that she might be less inclined to purchase additional slices unless the price decreases, but it does not guarantee her willingness to buy. Option D states that even if she buys a second slice, she will not buy a third, which is speculative without additional information about her utility beyond the second slice. With diminishing marginal utility, it’s likely that her utility from subsequent slices continues to decrease, but whether she stops after two depends on her valuation and the price.

In conclusion, the most accurate inference based on the law of diminishing marginal utility and the given satisfaction units is that the restaurant might need to lower the price of additional slices to encourage more purchases (Option A). This policy aligns with economic theory and consumer behavior, aiming to maintain or increase sales volume by adjusting prices in response to utility trends. While Kara’s utility diminishes, it does not necessarily mean she will refuse to buy more if prices are favorable, thus making pricing strategies crucial in such scenarios.

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