Question
Mr Rabbit, Mr Bear and Mr Fox go to town.A new bakery has just opened, and in an attempt to attract awareness, it is offering
Mr Rabbit, Mr Bear and Mr Fox go to town.A new bakery has just opened, and in an attempt to attract awareness, it is offering free unlimited samples of its chocolate chip cookies. However, the free cookies can only be consumed in-store (you cannot take them home).
Mr. Rabbit ate 10 cookies and then stopped
Mr. Bear ate 25 cookies before he stopped, then bought a milkshake.
Mr. Fox had 30 cookies and then stopped.
The owner of the bakery, Mr. Turtle, said "I am glad you like the cookies!"Here's is a funny story about my muffins...last week, I dropped the price on muffins 20% but I only sold 20% more!In the end, the total muffin sales were the same as if they were normally priced!!
Briefly explain your answer to the questions below:
- Who got to zero marginal utility for the cookies first?
- Mr Bear still was not full after 25 cookies, since he paid for a milkshake.Why would he pay for a milkshake when he could keep eating cookies for free?
- What kind of price elasticity is Mr Turtle seeing on his muffins?
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