Diminishing Demand for FineApps’ Canteen Food: Indifference or Incidental?

DIMINISHING DEMAND FOR FINEAPPS’ CANTEEN FOOD: INDIFFERENCE OR INCIDENTAL? ABSTRACT This caselet’s purpose is to introduce and illustrate the concept of indifference curves. FineApps’ Pvt. Ltd. (FineApps), a Pune-based mobile apps development company, founded in April 2012, was quite an employee friendly company as was evident from the various perks and facilities offered to its employees. In April 2014, another new perk was offered to the employees – FineApps replaced the small cafeteria with a large canteen providing free oriental cuisine to all the employees. The new facility, which was very well-received by the employees initially started showing signs of distress after 9 months of its inception. There was a diminishing trend in consumption of canteen food. Rajeshwar Goyal (Rajeshwar) – the HR and Administration Head at FineApps – was in a dilemma as the company was paying for lunch for all the employees every month. What were the reasons behind the diminishing trend in consumption of canteen food? In trying to identify the probable answers, the caselet helps understand related concepts in Economics such as the Law of Diminishing Marginal Utility, Consumer Surplus, Paradox of Value, Economics of Addiction, Indifference Curves, Marginal Rate of Substitution and Budget Line.

Pedagogical Objectives •

To understand the concepts of and interconnectedness between Utility (including cardinal and ordinal utility), Consumer Surplus and the Law of Diminishing Marginal Utility

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To understand how the concepts of ‘Paradox of Value’ and ‘Economics of Addiction’ help in understanding consumer behavior better

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To understand the relevance and operation of Indifference Curves in the context of consumer behavior with the properties of Indifference Curves and Marginal Rate of Substitution

Case Positioning and Setting This caselet can be used for: •

MBA Program in Managerial Economics course – To understand the concept of utility, the law of diminishing marginal utility and other related concepts

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