Why are there reflectors on my spin bike?

Economics can explain the bizarre. Consider the reflectors on this spin bike. It makes no sense to put reflectors on bikes destined to live indoors, does it?

In fact it does, if we reflect on the shapes of cost curves. A typical long-run average total cost curve slopes downward initially as an indication of economies of scale. That is, as a manufacturer increases the quantity of a particular product, the average cost of making it falls.

A company that makes road bikes and spin bikes has a choice. It can make smaller quantities of two types of pedals—those with and without reflectors—or it can make a larger quantity of pedals with reflectors and put that one type on both road bikes and spin bikes.

The firm enjoys economies of scale by making just one type of pedal, which makes sense because it only needs one design and one assembly line to make all of the pedals it needs. So, although you will never hit the streets on a one-wheeled spin bike, the reflectors on the pedals are helpful because they lower the price.

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