A visit to namma bengaluru and you plan to stay at hotel Ramada. An exciting deal - a hotel range that you can afford plus unlimited breakfast offered which is included in your hotel fee!!!
Sounds a good deal right?
But have you ever thought of why they offer ? What is the concept they use?
Well they use Law Of Diminishing Marginal Utility, which states with increase in consumption of a commodity the marginal utility derived from every additional unit of that commodity keeps on decreasing.
In breakfast also they organise a buffet where you may notice the satisfaction or the utility derived from the first plate you eat will be much more than the second plate. And even if you go for third round that will derive lesser or zero utility ,you'll be eating just to extract the worth of money paid. Thus for hotels is concept helps in grabbing more money from their customers pocket showing attractive schemes.
Sounds a good deal right?
But have you ever thought of why they offer ? What is the concept they use?
Well they use Law Of Diminishing Marginal Utility, which states with increase in consumption of a commodity the marginal utility derived from every additional unit of that commodity keeps on decreasing.
In breakfast also they organise a buffet where you may notice the satisfaction or the utility derived from the first plate you eat will be much more than the second plate. And even if you go for third round that will derive lesser or zero utility ,you'll be eating just to extract the worth of money paid. Thus for hotels is concept helps in grabbing more money from their customers pocket showing attractive schemes.
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