The photo shows the prices of a Kinder Surprise Egg and a pack of 3 Kinder Surprise Egg in Asda.
The price of a Kinder Surprise Egg is £1 while a pack of 3 is only £2.50, instead of £3 which is the price of a single Kinder Surprise Egg times 3. A pack of 3 is cheaper than a single Kinder Surprise Egg possibly due to the law of diminishing marginal utility. In this case, as consumption of Kinder Surprise Eggs increases, the satisfaction derived may increase at a decreasing rate or decrease, so customers are only willing to pay a lower price for it. Therefore, Asda set the price of a pack of 3 lower than a single Kinder Surprise Egg.
Alternatively, a pack of 3 is cheaper than a single Kinder Surprise Egg maybe because of the price elasticity of demand. Price elasticity of demand is the responsiveness of quantity demanded to a change in price. Kinder Surprise Egg is price elastic, as it is a luxury good which is not needed for survival. The producer of Kinder Surprise Eggs may want to decrease the price of the Eggs, as a result, a pack of 3 Kinder Surprise Egg is cheaper than one, the lower price causing a proportionally higher increase in demand so that revenue rises.
