1. Lesson 7A: The Spending Decision— Colas and Hot Dogs
Unit 7: Spending
Lesson 7A: The Spending Decision—
Colas and Hot Dogs
©2017, Minnesota Council on Economic Education. Developed in partnership with the Federal Reserve Bank of St. Louis.

2. How do people decide what combination of goods and services to buy?
Compelling Question
How do people decide what combination of goods and services to buy?
Lesson 7A

3. Visual 7A.1: Joe’s Satisfaction Index
Colas
Units of total satisfaction () 1 10 2 18 3 24 4 28 5 31 6 33
Hot dogs
Units of total satisfaction () 1 12 2 21 3 27 4 31 5 33 6 34 7
34.8 8
35.2
Lesson 7A

4. Visual 7A.2: Joe’s Satisfaction Alternatives
Colas
Units of cola satisfaction
Hot dogs
Units of hot dog
satisfaction
Units of TS*
(Total ) — 8
35.2 1 10 6 34 44 2 18 4 31 49 3 24 21 45 28
NOTE: *TS, total satisfaction.
Lesson 7A

5. Visual 7A.3: Joe’s Diminishing Returns
Colas
Units of TS*
(Total )
Units of
MS** (M)
Units of M per $
(M ÷ $2) 1 10 5 2 18 8 4 3 24 6 28 31
1.5 33
Hot dogs
Units of TS
(Total )
Units of M
Units of M per $
(M ÷ $1) 1 12 2 21 9 3 27 6 4 31 5 33 34 7
34.8
0.8 8
35.2
0.4
Lesson 7A
NOTE: *TS, total satisfaction. **MS, marginal satisfaction (M)

6. Visual 7A.4: Joe’s Marginal Satisfaction
Colas
Units of TS*
(Total )
Units of
MS** (M)
Units of M per $
(M ÷ $1) 1 10 2 18 8 3 24 6 4 28 5 31 33
Hot dogs
Units of TS
(Total )
Units of M
Units of M per $
(M ÷ $2) 1 12 6 2 21 9
4.5 3 27 4 31 5 33 34
0.5 7
34.8
0.8
0.4 8
35.2
0.2
Lesson 7A
NOTE: *TS, total satisfaction. **MS, marginal satisfaction (M)