Topic: Diminishing Marginal Utility 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. Using the concept of diminishing marginal utility, discuss how excited you will be on the first day of your winning. What about your excitement on the 10th day? What about your excitement on the 30th day? 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. Using the concept of diminishing marginal utility, discuss how excited you will be on the first day of your winning What about your excitement on the 10th day? What about your excitement on the 30th day? Again, considering the concept of utility, what makes these two scenarios different?
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Economics: Diminishing Marginal Utility
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Diminishing Marginal Utility
The law of diminishing marginal utility asserts that the marginal utility of goods diminish as one consumes more and more quantities of the goods (Drennan, 2006). In case of a favorite pizza served for free for lunch and dinner for a month, the initial day will be met with huge excitement. During the first day, the consumption will be exciting and this will mean the whole pizza provided for lunch and dinner will be consumed.
However, on the 10th day, with the same favorite pizza served for lunch and supper, the excitement diminishes and the desire to eat drops and the saturation is almost attained. For instance, it is likely that it will be difficult to consume completely the pizza provided for lunch and supper. On the 30th day, the excitement will have faded as saturation will have been attained, probably during this time, it would be hard to consume even half the pizza served for lunch, meaning at times the desire will not be there and the lunch or dinner or both pizza will not be consumed. The marginal utility on the 30th day will be negative.
When provided with favorite national brand gasoline for a month, the excitement will be high throughout the first day through the 10th and 30th day. The marginal utility in this scenario will most likely be constant. Although there could be different brands of gasoline, all offer the same utility, which keeps the consumption excitement the same. The main difference between these two scenarios is that for pizza, there are probably other substitute products that can offer same utility. However, for gasoline, the brand being the favorite is the ultimate choice that provides the best utility. Moreover, all gasoline offers same utility unlike pizza, where there are a host of different su………………………………………………….
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