Abstract: A real story about my observation on a Noodles menu. @Ben Zi discusses about its possible wrong pricing strategies, because of the properties of Vegetables and Eggs. When we make arbitrages, then, it would go bankruptcy.
Indian Noodles
I plan to share a real phenomenon which happened to me in my several time purchasing activities.This is about some observations on our economic behaviors between sellers and buyers.It may be that you have already thought about it time and again,the only difference is you base your explanation on your perspectives.
Because our mess is off every Sunday evening,hence,we have to go outside to buy our dinner.Noodles are most efficient and economical fast food for us,therefore,I have been persisting on it.Sometimes,when the cook is frying my noodles,I suddenly find out some secrets behind their menu.
I list four series of prices of various noodles in their menu:Half vegetable noodles-35 Rupees,full vegetable noodles-40 Rupees,half egg noodles-40 Rupees,full egg noodles-45 Rupees.
A simple question comes to my mind that the price gap between half veg/egg noodles and full veg/egg noodles is identical to 5 Rupees,but half vegetable noodles should be made up of more or less half amount of vegetables which are used for full vegetable noodles;the other side,half egg noodles could not be made up of more or less half an egg which is used for full egg noodles.
Simply put it,due to separability of vegetables and indivisibility of egg,when the amount of noodles differences between half veg/egg and full veg/egg noodles are exactly same,the wisest decision is to buy half egg noodles or full vegetable noodles.
You could easily observe that we opt two middle points of the series of prices,and totally eliminate the starting point and ending point.We rationally assume that half veg/egg noodles use around half amount of noodles used for full veg/egg noodles,and the noodles used for full veg noodles are equal to the noodles used for full egg noodles.
Under this assumption,we should not focus on quantity of noodles,instead on implied value placed by sellers of vegetables and egg.We have mentioned that vegetables like noodles could be precisely divided into pieces,but egg could not be divided into half an egg given that we request two parts of one egg should be equally divided.
This logically means that the cook would prepare a full egg for both of half egg noodles and full egg noodles,the only difference between half egg noodles and full egg noodles is quantity of noodles instead of amount of egg.
Furthermore,it shows clearly that our extra 5 Rupees are wholly contributed to half extra quantity of noodles in terms of egg noodles.When it comes to vegetable noodles,we take the same logic to analyze it,finding that because vegetables could be precisely divided into pieces.
Therefore,the cook should theoretically prepare half amount of vegetables (which are used for full veg noodles) for half veg noodles.Immediately,we are aware that the extra 5 Rupees paid to full veg noodles are divided into two parts,one part is paid to half more amount of noodles,the other part is paid to half more amount of vegetables.
If we compare our analyses about extra 5 Rupees between half veg/egg noodles and full veg/egg noodles,the findings give us some lightnings about our buying decision.With regards to extra 5 Rupees between half egg noodles and full egg noodles,it is completely paid to extra half more noodles.
However,as far as extra 5 Rupees between half veg noodles and full veg noodles are concerned,it is divided into one part paid for half more vegetables and the other part paid for half more noodles.Under this condition,our rational response is to buy half egg noodles at the cost of 40 Rupees,or full veg noodles at the cost of 40 Rupees.If you consider the analysis is too tedious and unnecessary,actually,you just do one thing to demonstrate this conclusion right.
You and one of your friends go to noodles vendors for two plates of noodles,you order the combination of half veg noodles and full egg noodles at the total cost of 80 Rupees,and your friend orders the combination of half egg noodles and full veg noodles at the total cost of 80 Rupees.You may find out that the quantities of noodles are same,the quantity of egg is identical to one,but the quantities of vegetables in your plate are only about half your friend's.
You may question the indivisibility of egg assumption.You think that the cook could use accurate measurement tools to measure egg's quantities included in half/full egg noodles.It is practically possible,but the cook would not take such a risk to do it.
For instance,the cook mixes several eggs to produce balanced egg liquid,then he uses a spoon to exactly give half egg noodles around half amount of egg which is used for full egg noodles.
However,such action is risky,because information asymmetry exists between buyers and sellers,buyers do not have any information about whether the egg liquid is undecayed or not,whether sellers pour some water into egg liquid or not,after all,solid egg could give buyers a signal that the egg was stored before usage.This information gap would risk loss of business,finally eliminate this sellers in the market.
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