Cochranomics

A new McDonald's commercial says "The only thing better than a quarter-pounder with cheese is--another quarter-pounder with cheese." I just want to point out the economic inconsistency here.

Normally, the Demand curve is downward sloping. This reflects Diminishing marginal utility. I value a second burger less than the first, because I am closer to my satiation point (I'm getting full, layman's terms). One must also consider Opportunity Costs, meaning the next best alternative use of my time or money. I do not want to consume burgers exclusively; I would like to spend some of my income on a beverage, or a pizza, or perhaps on a computer to write blog posts. Thus, the more quantity of burgers I have, the less I am willing to pay for an additional burger (Demand curve slopes down).

McDonald's asserts that the next burger (the "marginal" burger) is valued more than the previous burger. In other words, the burger eater has increasing marginal utility for burgers. Not only does he not get full, he gets more hungry the more burgers he eats, and in particular more hungry for burgers. The proportion of burgers he consumes to all other goods increases as he eats more burgers.



Note that the intersection point of this graph does not represent an equilibrium or a steady state, as it normally would. In fact this graph doesn't really make sense. I included it just so I could illustrate how consumer surplus is increasing.