The relationship between the diminishing marginal utility and the offer of the restaurants of “all you can eat” and the restrictions imposed by the restaurants in order to earn profits. Concept Introduction: Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

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Answer 1

Question

Chapter 6, Problem 1P

To determine

The relationship between the diminishing marginal utility and the offer of the restaurants of “all you can eat” and the restrictions imposed by the restaurants in order to earn profits.

Concept Introduction:

Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

Expert Solution & Answer

Explanation of Solution

The restaurant owners know this concept and know that a consumer will consume till that unit of good where his marginal utility is positive. They know that as consumer consumes more, the marginal utility starts falling. So, the customers would not want to go to dissatisfaction and this would make them stop soon.

Some restrictions that restaurant can impose on customers to make a profit are as follows:

(a) The customer cannot share his plates with other customers.

(b) Time of consumption must be limited.

(c) No takeaways are allowed in the bags.

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Consider the table below, which has data on insurance status and medical expenditures for different types of professors at Hypothetical University (HU), economics & criminology professors. Assume that there are an equal number of economics and criminology professors. Assume further that econ professors all have the same level of health and criminology professors all have the same level of health. There is evidence of 2021 Insured? Avg. Expenditures Insured? Avg. Expenditures 2020 Economics Professors Criminology Professors Yes. Yes $25,000 $15,000 0000 ??? ??? $28,000 $10,000 I. moral hazard because in 2021 criminology professors dropped their coverage and health expenditures went down. II. adverse selection because in response to rising premiums after 2020, the professors with lower health expenditure dropped coverage Both I and II neither I nor II

Answer 2

Question

Chapter 6, Problem 1P

To determine

The relationship between the diminishing marginal utility and the offer of the restaurants of “all you can eat” and the restrictions imposed by the restaurants in order to earn profits.

Concept Introduction:

Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

Expert Solution & Answer

Explanation of Solution

The restaurant owners know this concept and know that a consumer will consume till that unit of good where his marginal utility is positive. They know that as consumer consumes more, the marginal utility starts falling. So, the customers would not want to go to dissatisfaction and this would make them stop soon.

Some restrictions that restaurant can impose on customers to make a profit are as follows:

(a) The customer cannot share his plates with other customers.

(b) Time of consumption must be limited.

(c) No takeaways are allowed in the bags.

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Answer 3

Question

Chapter 6, Problem 1P

To determine

The relationship between the diminishing marginal utility and the offer of the restaurants of “all you can eat” and the restrictions imposed by the restaurants in order to earn profits.

Concept Introduction:

Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

Expert Solution & Answer

Explanation of Solution

The restaurant owners know this concept and know that a consumer will consume till that unit of good where his marginal utility is positive. They know that as consumer consumes more, the marginal utility starts falling. So, the customers would not want to go to dissatisfaction and this would make them stop soon.

Some restrictions that restaurant can impose on customers to make a profit are as follows:

(a) The customer cannot share his plates with other customers.

(b) Time of consumption must be limited.

(c) No takeaways are allowed in the bags.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 6, Problem 1P

To determine

The relationship between the diminishing marginal utility and the offer of the restaurants of “all you can eat” and the restrictions imposed by the restaurants in order to earn profits.

Concept Introduction:

Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

Expert Solution & Answer

Explanation of Solution

The restaurant owners know this concept and know that a consumer will consume till that unit of good where his marginal utility is positive. They know that as consumer consumes more, the marginal utility starts falling. So, the customers would not want to go to dissatisfaction and this would make them stop soon.

Some restrictions that restaurant can impose on customers to make a profit are as follows:

(a) The customer cannot share his plates with other customers.

(b) Time of consumption must be limited.

(c) No takeaways are allowed in the bags.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 6, Problem 1P

To determine

The relationship between the diminishing marginal utility and the offer of the restaurants of “all you can eat” and the restrictions imposed by the restaurants in order to earn profits.

Concept Introduction:

Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

Expert Solution & Answer

Explanation of Solution

The restaurant owners know this concept and know that a consumer will consume till that unit of good where his marginal utility is positive. They know that as consumer consumes more, the marginal utility starts falling. So, the customers would not want to go to dissatisfaction and this would make them stop soon.

Some restrictions that restaurant can impose on customers to make a profit are as follows:

(a) The customer cannot share his plates with other customers.

(b) Time of consumption must be limited.

(c) No takeaways are allowed in the bags.

Answer 6

Chapter 6, Problem 1P

To determine

The relationship between the diminishing marginal utility and the offer of the restaurants of “all you can eat” and the restrictions imposed by the restaurants in order to earn profits.

Concept Introduction:

Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

Expert Solution & Answer

Explanation of Solution

The restaurant owners know this concept and know that a consumer will consume till that unit of good where his marginal utility is positive. They know that as consumer consumes more, the marginal utility starts falling. So, the customers would not want to go to dissatisfaction and this would make them stop soon.

Some restrictions that restaurant can impose on customers to make a profit are as follows:

(a) The customer cannot share his plates with other customers.

(b) Time of consumption must be limited.

(c) No takeaways are allowed in the bags.

Answer 7

Chapter 6, Problem 1P

To determine

The relationship between the diminishing marginal utility and the offer of the restaurants of “all you can eat” and the restrictions imposed by the restaurants in order to earn profits.

Concept Introduction:

Law of Diminishing Marginal Utility: The law states that as we consume more and more of a unit, the successive utility from consuming additional units goes on falling. In other words, the marginal utility goes on falling as we consume more of a good.

Answer 8

Expert Solution & Answer

Explanation of Solution

The restaurant owners know this concept and know that a consumer will consume till that unit of good where his marginal utility is positive. They know that as consumer consumes more, the marginal utility starts falling. So, the customers would not want to go to dissatisfaction and this would make them stop soon.

Some restrictions that restaurant can impose on customers to make a profit are as follows:

(a) The customer cannot share his plates with other customers.

(b) Time of consumption must be limited.

(c) No takeaways are allowed in the bags.