Topic 12: Pizza for Pesos?

For this journal entry, watch the video "Pizza for Pesos" (watching this video has been assigned as a homework assignment, so be sure to click on the "submit" button after you watch it so that you can get credit). After watching the video, comment on it in your journal. In your writing, consider the following questions:

• How does the story in the video relate to the idea of utility?
• How does it relate to the concept of consumer preference?
• What affect do you think a change in the exchange rate between Mexican Pesos and U.S. Dollars would have on Pizza Patrón's business? How would it affect the budget lines of its customers? (currently the exchange rate is 12.97 pesos to the dollar).
• What do you think about the arguments against accepting pesos? How are these arguments related to our previous discussions regarding international trade?

• The story in the video relates to the idea of utility because one, the pizza chain consumers have to consider whether buying pizzas in pesos will increase their utility or not - when they buy pizzas with pesos, do they feel like they gain? How does it compare to the consumers buying with regular American dollar?
• The story in the video relates to the idea of consumer preference because it has to do with whether they prefer paying with pesos or the American dollar. Some people, who have a few extra pesos left, maybe from a trip to Mexico, may prefer pesos over the American dollar because they want to get rid of the extra peso change they have. For people who prefer to buy pizzas using the American dollar, then it doesn't matter that much to them, so their preferences and utility are not influenced.
• The exchange rate plays an important role because it may influence whether the consumer has to pay a higher fee or not, and it may cause some disputes. If the peso value increases, then the budget line for customers using the pesos will increase. If the peso value decreases, then the budget line for customers using the pesos will decrease.
• I believe that the argument accepting pesos is a good one, and quite valid as well. These arguments relate to our previous discussions regarding international trade because it has to do with the country prices and world prices.