2014_QNR 5. A pizza shop sells two round pizzas which have the same thickness but are different in size? The smaller one has a diameter of 30cm. The large one has a diameter of 60 cm and costs twice the prize of the smaller one.In terms of cost effectiveness or value for money which of the following statements is true ?
1)Each pizza is equally good value.
2)More information is needed to workout which is better value.
3)The larger pizza is better value.
4)The smaller pizza is better value.
Ans: The “value for money ” (VFM) or “cost effectiveness can be defined as below:
VFM = Volume of the Pizza/Cost= πR2T/P ; where R is the radius of the pizza, T is the thickness and P, Price.
In scenario 1, VFM1 = π152T/P [Radius is half the diameter].
In scenario 2, VFM2 = π302T/2P [Remember the cost is double here]
Ratio= VFM1/VFM2 =225*2/900= 1:2
As VFM2 > VFM1; option (3) the larger pizza is better value. [By cost effectiveness, we should mean “how much pizza can I buy with unit cost/currency“].