3. DRAWING CONCLUSIONS A baker knows that her customers will pay 5 for a loaf of bread, but the marginal utility they get decreases after the first loaf. How might the baker get her customers to buy more than one loaf?

To encourage customers to buy more than one loaf of bread, the baker can employ several strategies that leverage economic principles such as price discounts, bundling, or enhancing the perceived value of the product. Here are a few potential approaches:<br /><br />1. **Price Discounts for Multiple Loaves**: The baker could offer a discount for purchasing multiple loaves. For example, buying two loaves might be priced at $9 instead of $10 (a $1 discount), and three loaves might be priced at $12 instead of $15 (a $3 discount). This strategy leverages the concept of economies of scale and makes it more attractive for customers to buy more than one loaf.<br /><br />2. **Bundling**: The baker could create a "bread bundle" where customers receive a discount for buying a set number of loaves together. For instance, a "family pack" could include three loaves for a reduced price, making it a more economical choice for families or groups.<br /><br />3. **Enhancing Perceived Value**: The baker could enhance the perceived value of the bread by offering higher-quality or unique varieties. For example, offering artisan bread, whole grain bread, or bread with added nuts or seeds could make each loaf seem like a premium product. This can make customers more willing to purchase multiple loaves to experience different flavors and qualities.<br /><br />4. **Loyalty Programs**: The baker could introduce a loyalty program where customers earn points for each loaf they purchase. These points can then be redeemed for discounts on future purchases. This strategy encourages repeat business and can incentivize customers to buy more loaves to accumulate points.<br /><br />5. **Convenience Services**: The baker could offer convenience services such as home delivery or pre-ordering options. By making it easier for customers to purchase and receive bread, the baker can encourage them to buy more than one loaf at a time.<br /><br />6. **Promotional Campaigns**: The baker could run promotional campaigns highlighting the benefits of fresh bread, such as improved digestion, energy boosts, or the joy of homemade meals. By emphasizing the positive impacts of consuming fresh bread, the baker can make customers more inclined to buy multiple loaves.<br /><br />By implementing one or a combination of these strategies, the baker can effectively increase the demand for multiple loaves of bread and boost her sales.