Question

Now imagine, that are different types of masks, made of different materials, designs. Let's imagine, there is a particular one, that you have just bought with a Mickey Mouse design (or if you wish substitute Mickey Mouse with your own idea). It was pretty pricey, compared to other, plain masks. You friends tell you, you shouldn't have bought it for this high price, as it is overpriced. Based on what you have learned on consumer's bevaviour, try to explain them, why they are wrong.

The question is based on the Mankiw Principle of Economics.

Answer 1

At the given level of income, a consumer will purchase those goods and services that give them the maximum satisfaction irrespective the price of the commodity. In this scenario, buying the custom made mask might be expensive but as a rational consumer who makes decisions based on his/her marginal cost and marginal benefits will purchase the masks at higher price as long as the satisfaction or the utility derived from the product is equal to his/her maximum willingness to pay which may differ person to person depending on the consumer's income level and purchasing power.