A university is deciding between two meal plans. One plan charges a fixed fee of $600 per semester and allows students to eat as much as they want. The other plan charges a fee based on the quantity of food consumed. Under which plan will students eat the most? Explain through economic theory.
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Answer:
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Answer:
Explanation:
The student will eat most under the fixed plan. According the economic theory level of consumption increases based on the income increases. But in this circumstances mostly students are not employed. they are unemployed. So, to minimize the cost they prefer fixed cost. If they go with other plan they have to pay for every meal . the cost is varying with the number of meals taken. It will be expensive for the students.