Suppose you want to make rational dining choices at an all-you-can-eat buffet.How do you apply the rational spending rule?
A)you can't because the fixed price is a sunk cost that should not be taken into consideration.
B)you can't because once you have paid the sunk cost the price of each serving is zero,and since you can't divide by zero you cannot apply the rational choice formula.
C)you should continue to eat every item until your marginal utility from consuming each item equals the fixed price of the buffet.
D)you should continue to eat until your marginal utility from consuming each item exactly equals zero plus your non-monetary costs of staying at the buffet.

Question

Quizplus · Accepted Answer

The rational spending rule states that a person should continue to consume a product until the marginal utility from consuming the last unit equals the price of that unit plus any non-monetary costs of consuming it. In the case of an all-you-can-eat buffet, the price of each additional serving is effectively zero, so the rational approach is to continue consuming until the marginal utility from the last serving equals zero plus any non-monetary costs of staying at the buffet (such as feeling uncomfortably full or not wanting to waste time). Therefore, the best choice is D.

Suppose You Want to Make Rational Dining Choices at an All-You-Can-Eat