Read the following passage that describes why some consumers clip coupons while others don't. Then answer the question that follows. v THE ECONOMIC RATIONALE BEHIND COUPON CLIPPING, BY THE APLIA ECONOMICS CONTENT TEAM If coupon clipping is so rewarding, why doesn't everyone do it? According to basic economic theory, the number one reason is that coupon clipping isn't actually free. Sure, it doesn't explicitly cost you money out of your pocket, but It does cost you time to scan newspapers, magazines, and the Internet for savings that sometimes seem insignificant. Economists refer to this as the opportunity cost of clipping coupons. For example, an hour spent clipping coupons means an hour less to spend earning income, enjoying leisure time, or sleeping. For those who have fewer high-value alternatives competing for their time, such as stay-at-home parents or retired senior citizens, coupon clipping may be time well spent. According to the Wall Street Journal (Source: "Doing the Math on Coupons," Wall Street Journal, Brett Arends, last modified February 9, 2010, https://www.wsj.com/articles/SB10001424052748704820904575055392244583592), an hour spent looking for coupons can yield as much as $100 in savings. However, for those with high-income jobs and stable employment, searching for coupon deals is likely not high on the priority list. Therefore, coupons allow companies to practice price discrimination. That is, coupons segment the market into different consumer types-those with a high opportunity cost of time (for example, high-Income individuals with demanding careers) and, thus, a higher willingness to pay for a good, and those with a low opportunity cost of time (for instance, the unemployed or people not in the workforce) and, thus, a lower willingness to pay. By separating consumers into groups based on their willingness to pay and effectively charging each group a different price (since the coupon clippers pay less), producers can increase overall profits. True or False: The economic explanation for coupon clipping does not account for why more people clip coupons during recessions. O True O False
Read the following passage that describes why some consumers clip coupons while others don't. Then answer the question that follows. v THE ECONOMIC RATIONALE BEHIND COUPON CLIPPING, BY THE APLIA ECONOMICS CONTENT TEAM If coupon clipping is so rewarding, why doesn't everyone do it? According to basic economic theory, the number one reason is that coupon clipping isn't actually free. Sure, it doesn't explicitly cost you money out of your pocket, but It does cost you time to scan newspapers, magazines, and the Internet for savings that sometimes seem insignificant. Economists refer to this as the opportunity cost of clipping coupons. For example, an hour spent clipping coupons means an hour less to spend earning income, enjoying leisure time, or sleeping. For those who have fewer high-value alternatives competing for their time, such as stay-at-home parents or retired senior citizens, coupon clipping may be time well spent. According to the Wall Street Journal (Source: "Doing the Math on Coupons," Wall Street Journal, Brett Arends, last modified February 9, 2010, https://www.wsj.com/articles/SB10001424052748704820904575055392244583592), an hour spent looking for coupons can yield as much as $100 in savings. However, for those with high-income jobs and stable employment, searching for coupon deals is likely not high on the priority list. Therefore, coupons allow companies to practice price discrimination. That is, coupons segment the market into different consumer types-those with a high opportunity cost of time (for example, high-Income individuals with demanding careers) and, thus, a higher willingness to pay for a good, and those with a low opportunity cost of time (for instance, the unemployed or people not in the workforce) and, thus, a lower willingness to pay. By separating consumers into groups based on their willingness to pay and effectively charging each group a different price (since the coupon clippers pay less), producers can increase overall profits. True or False: The economic explanation for coupon clipping does not account for why more people clip coupons during recessions. O True O False
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:**Passage Title:** The Economic Rationale Behind Coupon Clipping, by the Aplia Economics Content Team
**Passage Text:**
If coupon clipping is so rewarding, why doesn’t everyone do it? According to basic economic theory, the number one reason is that coupon clipping isn’t actually free. Sure, it doesn’t explicitly cost you money out of your pocket, but it does cost you time to scan newspapers, magazines, and the Internet for savings that sometimes seem insignificant. Economists refer to this as the opportunity cost of clipping coupons. For example, an hour spent clipping coupons means an hour less to spend earning income, enjoying leisure time, or sleeping.
For those who have fewer high-value alternatives competing for their time, such as stay-at-home parents or retired senior citizens, coupon clipping may be time well spent. According to the Wall Street Journal (Source: "Doing the Math on Coupons," Wall Street Journal, Brett Arends, last modified February 9, 2010, https://www.wsj.com/articles/SB10001424052748704820904575055392244583592), an hour spent looking for coupons can yield as much as $100 in savings. However, for those with high-income jobs and stable employment, searching for coupon deals is likely not high on the priority list. Therefore, coupons allow companies to practice price discrimination. That is, coupons segment the market into different consumer types—those with a high opportunity cost of time (for example, high-income individuals with demanding careers) and, thus, a higher willingness to pay for a good, and those with a low opportunity cost of time (for instance, the unemployed or people not in the workforce) and, thus, a lower willingness to pay. By separating consumers into groups based on their willingness to pay and effectively charging each group a different price (since the coupon clippers pay less), producers can increase overall profits.
**Question:**
True or False: The economic explanation for coupon clipping does not account for why more people clip coupons during recessions.
- True
- False
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education