Homework Help is Here – Start Your Trial Now!
Business
Economics
True or false 12

True or false 12

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question

True or false 12

Read the following passage that describes why some consumers clip coupons while others don't. Then answer the question that follows. - 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 savings that sometimes seem insignificant. Economists refer to this as the opportunity cost of dipping coupons. For example, an hour spent dipping 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 dipping may be time well spent. According to the Wall Streetr Journal (Source: "Doing the Math on Coupons," Wall Street Journal, Brett Arends, last modified February 9, 2010, https://www.wsj.com/articles/SB10001424052748704820904575O55392244583592), 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 dippers pay less), producers a increase overall profits True or False: According to economic theory, because coupons are free, people who do not coupons are behaving irrationally. O True
Transcribed Image Text:Read the following passage that describes why some consumers clip coupons while others don't. Then answer the question that follows. - 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 savings that sometimes seem insignificant. Economists refer to this as the opportunity cost of dipping coupons. For example, an hour spent dipping 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 dipping may be time well spent. According to the Wall Streetr Journal (Source: "Doing the Math on Coupons," Wall Street Journal, Brett Arends, last modified February 9, 2010, https://www.wsj.com/articles/SB10001424052748704820904575O55392244583592), 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 dippers pay less), producers a increase overall profits True or False: According to economic theory, because coupons are free, people who do not coupons are behaving irrationally. O True
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Sales
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
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
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)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
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-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS