Question

. You are considering either dining at Pizza Inn, an all-you-can-eat pizza chain, or buying pizza by the slice from Dante’s in the mall for $2/slice. At which restaurant are you likely to obtain the most marginal utility from the last slice you eat? Explain your response.

Answer 1

From Pizza Inn, which is an all-you-can-eat pizza chain, you are supposed to eat as much as you can by paying a fixed price. This encourages you to keep eating till you feel you are full and you cannot eat more. This implies that your marginal utility will be 0 in this case case and thus, the marginal utility from the last slice you eat. However, when you eat at Dante’s in the mall where price per slice is $2. Here you are likely to eat till your marginal utility remains positive. Because each additional slice has a cost, you are supposed to stopped at a number of slices that is expected to be smaller relative to the number at Pizza Inn

Hence, At Dante’s in the mall you are likely to obtain the most marginal utility from the last slice you eat.