For the producers, there is an extra cost for installing a light into each side of the fridge. It is a fixed cost, since there is no extra cost for the light turning on no matter how many times you open it. In order to find the reason why there is a light on one side and not the other, we need to look at the cost-benefit analysis. The benefit of having a light turn on when you open the door is that it is easier to find the things you are looking for. The refrigerator is opened much more than the freezer is,\u00a0 so there is a much greater benefit to the consumer than there would be a benefit of putting it on the freezer side. So the extra cost of the producer adding a light in the refrigerator side is also a benefit. Since it is not detrimental for a consumer to have a light on the freezer side, most consumers do not mind paying the average amount for a refrigerator with no freezer light. But as income increases for the consumer, the benefit of having a light on the freezer side increases as well. The cost-benefit principle predicts that for consumers with a high amount of income, will think a light in the freezer is worth the extra cost.<\/p>\n","protected":false},"excerpt":{"rendered":"
For the producers, there is an extra cost for installing a light into each side of the fridge. It is a fixed cost, since there is no extra cost for the light turning on no matter how many times you … Continue reading