Question

Give 3 examples of which you've used marginal thinking in everyday life, explain the situation clearly and describe your thoughts.

Answer 1

Marginal thinking is a decision making process used by economists and people in their day to day life. It requires individuals to evaluate whether benefit of consuming one additional unit of something is greater than its cost.

Here are the three examples showing how I use marginal thinking in my day to day life:

1. Amusement parks: Amusement parks usually give discounts if you take two-day passes to the park. Although, first day is exiting for most of the people. Now, once people get back home after first day tired and exhausted, next day price for the tickets are usually lesser for attracting people back to the parks. I use the marginal thinking in this case, thinking if benefits of going to the park on the second day is actually equal or lesser than the costs. If parks are providing with discount, I usually go else I don't.

2. Buffets: Most of the All-you-can-eat buffets offer the promise of unlimited food at a fixed price. Most of the time, I know what is my capacity to eat? If I feel that the price of buffet is actually lesser than what my capacity, I opt for buffets else I go with the normal mean and not buffets. In this case, I simply judge the price which I will be paying to eat whatever I can is lesser or more than the benefits. Since, the additional cost of eating at buffets is considerably higher than the benefits, I decide not to go or opt for the buffets.

3. Mobile phone recharge packs: Most of the mobile companies provide with longer talktime and validity with recharges of higher denomination and value. For someone like me, who do not talk to a lot of people, the marginal benefit of having such packs on my phone is not that good. Or in other words, the cost of additional unit consumption is much more than the benefits. Thus, I do not go with mobile recharge packs with higher talktime.