Friday, August 19, 2011

From an economics text, questions...?

(1) the number of pizza's you eat would INCREASE. 2 things come to mind: 1. You want to experience the variety (this increases utility) 2. It would be a great relative price. A lower (relative) price increases QD, ceterius paribius. How would the quality be affected? I am a little confused. The marginal value of the last unit would equal the PRICE of the pizza minus the previous marginal values. That's just common sense. This has to equal the marginal cost of the last topping, if we want are quantity to be efficient. Yes, I am consuming both the efficient number of toppings and pizzas.

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