Unit 2: Elasticity, Consumer Choice, Costs

Lesson 6a: Consumer Decisions: Utility Maximization

Something Interesting - Why are we studying this?

 

In October and November ski resorts in the west begin to open with just a few runs open and large crowds of skiers and snowboarders. In late April most western ski areas have a lot of snow and are mostly 100% open but few skiers and snowboarders come. Why? Why are there so many customers when the snow is bad in the fall and so few when the snow is good in the spring?

Read the following from an online skiing discussion forum: http://www.epicski.com/t/39322/skiing-in-past-march-why-not-popular
Note: "PNW" means the "Pacific northwest" (i.e. the states of Oregon and Washington).

The skier asks, "But, for some reason, people just stop skiing (in April). WHY? I just don't understand." After studying this lesson you should be able to explain WHY to the skier who posted on the forum.

Here is another interesting question: Why do pop vending machines allow you to only get one can at a time while newspaper vending machines allow you to take as many as you want when you only pay for one?

ANSWER: The answer to both questions has to do with the "law of diminishing marginal utility".

 

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Lesson 6a