Question

Imagine that you sell popcorn at the local football stadium. knowing about diminishing marginal utility, how would you price your popcorn after half-time?

Answer 1

Answer: Charge a lower price after half-time

Explanation: Law of diminishing marginal utility holds that as the consumer consumes more and more units of a commodity, the incremental satisfaction derived from the successive units begins to fall after a certain point. Thus, as marginal utility begins to fall the persons willingness to pay shall also decline for the successive units. Therefore, the seller must sell the pop-corns at a lower price after half-time.