Question

Suppose that a coffee lover values his first cup of coffee each morning at $6, but the second one is much less valuable. the local coffee shop allows a person who buys one cup of coffee to come back later that day and purchase a second cup of coffee for $1, which the coffee lover does. we would say the local coffee shop is using marginal thinking to make additional sales, and the coffee lover is using .

Answer 1

The coffee shop is using incentives to get coffee drinkers to go for a second cup. Marginal thinking is the evaluation made by decision makers (like a coffee drinker) in which they determine whether the benefit of one more unit of something is greater than its cost. In this case, the second cup for a dollar is worth it to the consumer.