Question

Which bulb would be preferred by more customers, a 100-watt bulb that burns for 1500

hours and cost $3.00 or a 75-watt bulb that burns for 2000 hours and costs $2.50?

Answer 1

Answer

The customer would prefer a 100-watt bulb that burns for 1500 hours.

The total consumption from the first bulb = 100 * 1500 = 150000 units

The total consumption from the second bulb = 75 * 2000 = 150000 units

So, the total consumption from the first bulb is same as the total consumption from the second bulb.

When the consumers purchase different goods in the same quantity for the same purpose, they like to order the goods in terms of the utility they get from the goods and then make choice among them.Here in the case of bulbs, we measure their utilities in terms of 'watt', and we see that the utility from 100-watt bulb, is greater than the utility from the 75-watt bulb. So order-wise the first bulb will get rank 1 and the second bulb will get rank 2.

In terms of money, the consumer pays $3 for the first bulb, and $2.50 for the second bulb. Now if the consumer pays $1 for each bulb, she will get 33.3 watt (100 / 3) from the first bulb, and 30 watt (75 / 2.50) from the second bulb. So for an extra dollar the consumer spends for the bulbs, the utility she gets from the first bulb is greater than the second bulb.

So , after the analysis, we see that most of the customers would prefer the first bulb.

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