Diminishing Demand for FineApps’ Canteen Food: Indifference or Incidental?
This caselet revolves around the canteen-related dilemmas faced by Rajeshwar Goyal (Rajeshwar), the HR and Administration Head at FineApps Pvt. Ltd. (FineApps), a Pune-based mobile apps development company. FineApps offered several perks to its employees being an employee friendly organization. However, the perk of free oriental food for lunch in office canteen, initially well-received, started posing problems for FineApps. Not all the employees consumed the free canteen food although the company was paying for all of them to the canteen service provider as per the agreement. In discussing the problem, the caselet throws light on the concepts of utility and the Law of Diminishing Marginal Utility. It also showcases instances that help in understanding other related concepts such as Consumer Surplus, Paradox of Value, Economics of Addiction, Indifference Curves, Marginal Rate of Substitution and Budget Line. Enabling a discussion on these concepts, the caselet helps students identify a solution to Rajeshwar’s dilemma.
Prerequisite Conceptual Understanding
- • Paul A. Samuelson, et al., “Demand and Consumer Behavior”, Economics, 19th Edition, McGraw Hill Education (India) Private Limited, 2010 – To have an understanding of the concept of utility and other related concepts
Case Positioning and Setting
This caselet can be used for:
- • MBA Program in Managerial Economics course – To understand the concept of utility and how it shapes consumer behavior and demand
- I. Using the case facts, illustrate the manifestation/operation of the following concepts: (a) Utility, (b) the difference between Cardinal Utility and Ordinal Utility, (c) Consumer Surplus, and (d) The Law of Diminishing Marginal Utility. Why are these concepts important for understanding the consumer behavior of a rational consumer?
- II. How do you think an understanding and appreciation of the concepts of (a) Paradox of Value and (b) Economics of Addiction, would be helpful in understanding the consumer behavior of a rational consumer? How would the case facts help in understanding the purport of these two concepts?
- III. .....................................
Preamble to this Caselet Analysis
This caselet helps understand the concept of utility and all the other related concepts – Cardinal Utility vs Ordinal Utility, Marginal Utility and the Law of Diminishing Marginal Utility. The caselet aims to help correlate the aforementioned concepts with consumer demand and consumer behavior. During the classroom discussion, the concepts were first explained using appropriate examples and then the students/participants were asked to relate the same to case facts. The classroom discussion was orchestrated as shown in Exhibit (TN)-I.....................