Question

• Brainstorm common items that you think consumers pay too much for or that you think are overpriced (i.e. movie theater popcorn, brand name items, souvenirs,, etc.). Now think of something more specific, either something that you or someone who know has purchased. For example, I know someone with a baby who was traveling and purchased a small pouch of baby food for $2.00, when even more baby food could have been purchased in a jar for around $0.50.
• Write about your example, then use the principles you’ve learned about (like scarcity, opportunity cost, rationality, and marginal analysis) to explain why a person would make the decision to purchase that good.

Answer 1

airport food or the food served in flights are highly overpriced. one sandwich costs around rs 200 in indigo airlines india.

passengers buy food at such high prices because they have no other alternative available. long distance flights without food are not possible. so a person has to pay more than his marginal benefit or utility from consumption of that good. it may seem irrational but the opportunity cost can be higher if the person does not buy food and suffers from illness. so passenger would make the decision to purachse that good.