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Calorie Logic

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In a recent column in the New York Times, Jane Brody quotes a nutrition professor lamenting the fact that “restaurants have resisted her suggestion to serve half the amount of food for about a third the price.”  The professor might have thought more about economic behavior. (Even if she had suggested cutting the price to half for one-third the food, it still would not have been good economic analysis. The labor costs of preparing and serving half the food are probably nearly identical to those of serving the full amount.)  

In a competitive industry this means that her proposal would lower average cost per serving by less than half, making it impossible to cover costs if prices are cut by 2/3.  A profit-maximizing monopolist wouldn’t cut price by 2/3 either.  The nutrition professor’s only hope is that restaurants would cut prices this much out of altruism or to set examples for others. I wouldn’t bet on that — and the professor should not have been surprised.