Many supermarkets provide regular shoppers with “loyalty cards." By using the card when checking out, a shopper receives reduced prices on a few goods, and the supermarket compiles information on the shoppers’ purchases. Some supermarkets have switched from giving the same price reductions to all shoppers to giving some shoppers coupons that depend on a shopper's history. A manager at one supermarket that uses this approach said, "It comes down to understanding elasticity at a household level." Why would making the availability of coupons depend on a shopper's buying history involve “understanding elasticity at a household level?" What information from a shopper's buying history would be relevant in predicting the shopper's response to a price discount? 55

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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3.
Many supermarkets provide regular shoppers with "loyalty cards." By using the
card when checking out, a shopper receives reduced prices on a few goods, and
the supermarket compiles information on the shoppers' purchases. Some
supermarkets have switched from giving the same price reductions to all shoppers
to giving some shoppers coupons that depend on a shopper's history. A manager
at one supermarket that uses this approach said, "It comes down to understanding
elasticity at a household level." Why would making the availability of coupons
depend on a shopper's buying history involve "understanding elasticity at a
household level?" What information from a shopper's buying history would be
relevant in predicting the shopper's response to a price discount?
Transcribed Image Text:3. Many supermarkets provide regular shoppers with "loyalty cards." By using the card when checking out, a shopper receives reduced prices on a few goods, and the supermarket compiles information on the shoppers' purchases. Some supermarkets have switched from giving the same price reductions to all shoppers to giving some shoppers coupons that depend on a shopper's history. A manager at one supermarket that uses this approach said, "It comes down to understanding elasticity at a household level." Why would making the availability of coupons depend on a shopper's buying history involve "understanding elasticity at a household level?" What information from a shopper's buying history would be relevant in predicting the shopper's response to a price discount?
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