Question

Newspaper and soft drink are priced almost the same around $1 per unit by vending machines. Given the same unit price (value), how come a newspaper vending machine can be opened easily (i.e. take as many as you want) but a Coke vending machine is tough to open (i.e. drop one can at a time)? Please discuss it by marginal analysis for optimization.

Answer 1

Newspaper vending machine then that marginal utilityfor multiple papers is now zero. The reason for this is because all of the papers are the same orone item. There is no more new to be learned by taking more papers. In the event that thevending machine would allow you to take more than one paper, you would not.

For a vending machine that dispenses more than one item, then the marginal utility cost is positive.Coke vending machine, once the first Coke is drank, the second onewill provide more utility. It will give less utility then the first Coke but the marginal utility (eventhough diminished) will still be positive. If the Coke vending machine was designed to allow you to take multiple cokes after only paying for one you would. This is why the machine is made toonly give one Coke after one Coke is paid for.

Basically, total benefit of a soda is greater because it has a longer shelf-life.