At Nice Price for the Ice, an ice cream parlor, customers routinely buy a scoop of ice cream for $3. Why don't consumers keep buying more and more scoops for $3 until the store sells out?

Question

29-10-2024
Business

High School

We appreciate your visit to At Nice Price for the Ice an ice cream parlor customers routinely buy a scoop of ice cream for 3 Why don t consumers keep. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!

At Nice Price for the Ice, an ice cream parlor, customers routinely buy a scoop of ice cream for $3. Why don't consumers keep buying more and more scoops for $3 until the store sells out?

Answer :

Other Questions

Below are True or False questions: 1. The genus name for a

When utilizing the IPDE defensive driving strategy to manage space zones, the

Upon being struck by 99.3-nm photons, a metal ejects electrons with a

8. Which sentence has proper parallel structure? A. The proposal affects three

In the story of Icarus, what part of the plot is Icarus

A 55-year-old woman undergoes annual tuberculin skin testing. An 8-mm induration is

Jessica cuts a ribbon with a length of 12 inches into three

A physicist with a mass of 99 kg is standing on a

Last year, Hawaii did not receive many rainstorms, and with eight months

Which of the following statements best supports the fact that even during

AlfredFrank AlfredFrank · Answer 1 · 2024-05-29T00:55:07-04:00

Final answer:

Customers refrain from buying infinite amounts of ice cream at $3 per scoop due to diminishing utility and budget constraints. A demand curve illustrates that higher prices lead to decreased demand, and the ice cream parlor must find an optimal pricing strategy to maximize profits while maintaining customer demand.

Explanation:

Customers do not keep buying ice cream scoops for $3 each until the store sells out due to the economic principle of diminishing utility. Every scoop of ice cream provides less satisfaction than the previous one, and eventually, the cost of the additional scoop outweighs the pleasure received from eating it. Additionally, customers have a limited amount of money to spend and must consider their overall budget when making purchasing decisions. This fiscal restraint and the diminishing utility work together to ensure that a single customer does not deplete the entire stock of ice cream.

The concept of a demand curve also explains this behavior. As the price of an item increases, the number of units sold typically decreases. If the ice cream parlor raises the price to $3, according to the demand curve, sales are expected to drop because fewer people find the higher price to be worth the enjoyment of the ice cream bar. They might have previously sold 36,000 units at $1.50 each; the higher price of $3 would likely result in a significant drop in quantity demanded. Essentially, the price elasticity of demand indicates that consumers are sensitive to price changes, and as the price rises, the quantity demanded falls.

Moreover, the balance between cost and revenue is vital for the sustainability of the business. The ice cream parlor can decide on the optimal price point that maximizes profit without deterring too many customers. Analysis of the revenue, costs, and profit margins at different price levels helps guide this decision-making process, ensuring economic viability.