Economic

Week3_reponses

Wrote Kristalyn:Hello Class,One of the reason why monopoly sellers usually offer discount prices to buyers is to attract more consumers. Companies know that there’s a lot of competitors and companies are getting innovative on how to give discounts to customers in order for them to use/buy their products. From my experience, I get a rebate for my contact lenses. Businesses need to entice more buyers. The other reason for rebate is to decrease the amount of product returns to the merchandise. This will also increase the sales of the business.According to Kimberly Amadeo (2020) “A traditional economy is a system that relies on customs, history, and time-honored beliefs. Tradition guides economic decisions such as production and distribution.” It is not one of the customs to go to a weight-loss camp back in the day. But since in modern days this is getting trending. People are determine to loss weight and would pay extra money. Since in traditional economy, it seem like the weight-loss camp is an extra expense. Traditional economy depends on agriculture, fishing, hunting and gathering. Using barter instead of money.Reference:Amadeo, Kimberly. (2020). Traditional Economy With Its Characteristics, Pros, Cons, and Examples. Retrieved fromhttps://www.thebalance.com/traditional-economy-definition-examples-pros-cons-3305587Cleora Wrote:Hello Instructor De Point & Classmates,Explain why monopoly sellers usually offer discount prices to buyers who are willing to mail in a rebate coupon or endure some other type of inconvenience.Rebate coupons are ingenious promotion tools. The rebate value is big enough to entice more buyers. And some percentage of the mailed checks is thrown away as junk mail and never cashed.No wonder rebate coupons are popular with manufacturers. The total annual face value of 400 million rebates is estimated to be $6 billion. The un-redeemed value of the rebates amounts to $2 billion. The un-redeemed rebate reduced the expected rebate expense of TiVo Inc. enough to help lower its estimated first-quarter loss from $9.1 million to less than $1 million in the same period from the previous year (BW 12/5/2005).Although price discounting may not serve the purpose of permanently switching brand loyalty in mature products based on open standards, manufacturers cannot unilaterally stop the practice without losing market share to competitors. In other words, price discounting may be a collectively inferior but stable solution to a basicallyprisoner’sdilemmagame. (“Rebate” in Wikipedia.).Discuss why traditional economic models find it difficult to explain why people would pay to attend weight-loss camps that restrict their daily calorie intake.Because traditional economic models are based on some rigid assumptions that people are rational or they are risk averse. However in today’s economic scenarios these assumptions don’t seem to hold good because the majority of people tend to behave differently in certain situations. For example, if there is no risk of losing money people prefer to take the risk otherwise they become loss averse not risk averse. . (Study.com 2003-2020)People think that excess weight can cause them health risk, which can cause future economic loss. So if they reduce their daily calorie intake, they will lose excess weight and avoid health risk and future economic loss therefore; it is viable to pay a little amount now to weight loss camps. While classical models are failed, the behavioral economics model is able to explain the current behavior of the systems. (Study.com 2003-2020)Reference:Business Week. 12/5/2005. “The great rebate runaround.”The Great Rebate Debate.” smartmoney.com. [Updated 4/17/2007; cited 8/9/2007]WSJ. 5/10/1994. “Marketing: awash in coupons? Some firms try to stem the tide.””Rebate (marketing)”. [Cited 8/9/2007].

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