Question

some restaurants offer “all you can eat” meals. how is this practice related to diminishing marginal utility? what restrictions must the restaurant impose on the customer in order to make a profit?

Answer 1

Answer :-

Before answering the given question, we have to know some words which are relevant to the given question.

Marginal Valuation:

The dollar value of the marginal utility derived from consuming each additional unit of good.

Marginal Utility:

The change in your total utility from a one-unit change in your consumption of a good.

Law of diminishing marginal utility:

The more of a good a person consumes per period, the smaller the increase in total utility from consuming one more unit, other things constant.

Now we come to the question :

A customer's satisfaction (utility) decreases as they eat more which prevents them from eating so much that the restaurant won't make profit.

The marginal utility derived from each additional plate of food will diminish as you become full. The marginal utility after a certain amount has been consumed.

Restrictions :

The restaurant must require that the consumer not take food home in a "doggy bag" and that the consumer not share the meal with others at the table and some have time limits.