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Vending machines that sell candy and drinks are engineered so that only one item is dispensed at a time. Vending machines that sell newspapers are engineered so that the consumer has access to a pile of papers although they have paid for only one paper. Can you use consumer demand theory to explain this difference (hint consider the structure of preferences for different goods)?

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019

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Related questions

Newspaper vending machines are designed so that once you have paid for one paper; you have access to all the papers in the machine and could take multiple papers at a time. However, other vending machines dispense only one item (the item you bought). You do not have access to all the goods (sodas, candy, snacks, etc.) at one time. Using the concept of marginal utility, explain why these vending machines differ? 

1.Use the concept of marginal utility to explain the following: Newspaper vending machines are designed so that once you have paid for one paper, you could take more than one paper at a time. But soda vending machines, once you have paid for one soda, dispense only one soda at a time.

2.Explain why a rational consumer who had diminishing marginal utility for a good would not consume an additional unit when it generates negative marginal utility, even when that unit is free. Include an example in your explanation.

Macroeconomics ( 250-300 words)

Read the Introduction (pp. 1-13) and excerpt from Chapter 2: Free Peanuts and Expensive Batteries (pp. 29-41) from The Economic Naturalist by Robert Frank.

Discuss Rudyard Kipling popularized the Just So stories as a fictional way to explain why things happened in a particular way. Robert Frank applies a similar approach to come up with non-fictional, economically sound explanations for various economic phenomena, such as why gas tanks on cars are not always on the same side; why child safety seats aren't required on planes; or why people can take as many newspapers as they want from vending machines, but not take as many sodas as they want. For the first online assignment, you will find your own example.

Using Frank's approach, find an example in the news or in your personal experience relating to the price of an item or relative prices of different items, the supply, and demand for an item, the design of an item, the wages of a particular job, an item which is sold for different prices to different people, or an item that exhibits market failure (such as a public good or that has an externality). You MUST indicate your source (ie news article, etc). Using this example, you must write an opening question such as Frank uses (eg. Why do restaurants offer free refills on coffee? or Why do color photographs sell for less than black and white?). Give your reasoning using the relevant concept in microeconomics to explain the situation. There is probably no single correct answer, so you should make your best argument.

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