Why Barbecue Mix Combo is More Costly than Barbecue Regular?

Why Barbecue Mix Combo is More Costly than Barbecue Regular?

It is not uncommon to see that the price of barbecue mix combo with rice/noodle is more expensive than barbecue regular with rice/noodle. For instance, at HKUST LG1, barbecue pork with rice is $22 while barbecue pork mix soy sauce chicken with rice is $25. Many people tried to use the concept of diminishing marginal benefit, diminishing marginal utility or diminishing marginal use value, etc. to explain this phenomenon. These explanations, however, have missed one crucial condition. In this article, I will give a full explanation for the case that a combo is more expensive than a solo.

The Condition of Diminishing Marginal Utility

Many people use diminishing marginal utility to explain this phenomenon. When a consume keep buying the certain good, the additional utility (or benefit) will decrease. Picture that, what do you feel for the first bite of your barbecue pork when you just finished the 8-hour lectures? You definitely feel very dim and very ecstasy. Then, what do you feel when you are eating the tenth bowl of barbecue pork with rice? You will think that they are shit. Therefore, if you have more variety of choices, the diminishing marginal utility of each component is smaller. Thus, the aggregate of your satisfaction is larger. As a result, you are willing to pay a higher price. This is convincing, isn’t it?

The Missing Condition: The Combination Have to be Complement

Well, if you tried to add some milk into a cup lemon tea, I guess no one is willing to pay a higher price for this combo than just a cup of lemon tea or just a cup of milk. The reason why the combo can be sold at a higher price, or why consumers are willing to pay a higher price for the combo, is that the combo are complementary to each other. Tofu is complementary to roasted pork, thus consumers are willing to pay a higher price for braised tofu with roast pork. Lemon tea and milk are not complementary to each other. Consumers will not pay a higher price even if they exist diminishing marginal utility.