Question

Two economists are attending a conference in an unfamiliar city. At the end of the day, Economist A states she is “in the mood for a high quality dinner” and wanders through the center of the city looking for a restaurant. After narrowing her search to two fine-dining establishments located on the same block, she ultimately selects the restaurant with the higher prices. Assume you are Economist B and choose to go to a one-price all-you-can-eat buffet nearby. Using economic theory, what might account for the difference in behavior between Economist A and you (assuming cost is not an issue)? How would you go about maximizing your utility compared to Economist A? Next year when you both return to an economics conference in the same city, which of the two restaurants do you think has a higher chance of not being there anymore? Explain.

Answer 1

Utility maximisation refers to the concept that individuals and firms seek to get the highest satisfaction from their economic decision.when deciding to spend a fixed by Economist B purchased the combination of goods/services that give the most satisfaction.Utility maximisation is an important concept in classical economics. It developed from the utilitarian philosophers of Jeremy Bentham and John Stuart Mill. Early economists such as Alfred Marshall incorporated utility maximisation into economic theory.An important assumption of classical economics is that the price consumers are willing to pay is a good approximation to the utility that they get from the good. If people are  is  willing to pay £800 for an qualiity dinner then this suggests the Economist B must get a utility of at least £800.

According to me the higher chance of not being in the Restaurant with high quality dinner.As mentioned earlier, customers opt for buffets predominantly for the variety they get for the money they pay. If they were to order every dish they wanted from the menu it’d cost them a lot more. As a restaurant, you have advantage over the no buffet restaurants. Since large groups and families prefer buffets these days, it works out great for you. You can rotate dishes as you like according to your inventory and keep customers happy with new dishes every now and then. It also is a great base for marketing your restaurant whenever there’s something special on the menu for buffet especially during festivals and other holidays.To an extent, yes. Customers know what they’re getting and can’t customize the dishes as per their taste. This helps in relatively smooth flow of operations and your staff can be slightly more relaxed during these services. Diners only expect a wide variety of food for them to choose from and make their own tasting menu of sorts and won’t take any of the staff’s time to alter their food. The food needs to be cooked in massive portions and then laid out in time for lunch or dinner. Get your prep right and it’s going to be a easy service. When diners have a good time at buffets they tend to come back because it becomes a family ritual of sorts.