When checking out at grocery stores machines will

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When checking out at grocery stores, machines will automatically print coupons for membership card holders. Different people get different coupons. Why? Membership card records the information of historical transaction. Market Bucket Analysis is performed in the background to analyze consumers consumption behavior. Coupons are used for Price Discrimination : charge consumers a high price if they are not sensitive to price change; charge consumers a low price if they are sensitive to price change. By price discrimination, firms can make higher profit.
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GESB 1006: Economics of Everyday Life University of Macau A Third Example – Let’s Play A Game! Rules: The game can last for many rounds. In each round, both you and I choose a number from the following set [1,2,3,4,5,6,7,8,9,10] A number can be picked repeatedly. The player who FIRST makes the sum of all numbers picked equal to 100 WINS the game. That seems a fair game to play! I claim that, as long as I am the first mover in each round, I will ALWAYS win!
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GESB 1006: Economics of Everyday Life University of Macau What is Economics? Economics studies how to allocate the limited resources efficiently. It is about solving the constrained optimization problems related to our lives. Optimization: making the best use of resources. Constraint: usually related to the scarcity of resources.
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GESB 1006: Economics of Everyday Life University of Macau Scarcity Scarcity refers to the limited nature of resources. On this planet, almost everything that we can use for production and/or consumption is scarce. Land, Crude Oil, Water, Coal, etc. Education, Healthcare, Public Transportation, etc. Monetary Wealth. Time.
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GESB 1006: Economics of Everyday Life University of Macau Ten Principles of Economics Principle 1 : People face trade-offs. Trade-off : to get something you like is usually at the cost of giving up something else. Examples at the individual level: Playing video games the night before an exam -Less time for studying. Buying a bottle of Diptyque fragrance -Could alternatively buy a bottle of Chanel fragrance + YSL lipstick. Examples at the social level: Protecting the environment -Lower the production efficiency less goods to consume. Equality vs Efficiency -Subsidizing poor people who are too lazy to work.
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GESB 1006: Economics of Everyday Life University of Macau Ten Principles of Economics Principle 2 : The cost of something is what you give up to get it. When making decisions, we need compare the cost of something with the benefits of its alternatives . Opportunity Cost Examples: Going to graduate school: -Tuition, fees, and textbooks; - PLUS the wage one would earn if finding a job. Going to the movies -Price of movie ticket and cost of transportation; - PLUS the value of time you spend in theater.
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GESB 1006: Economics of Everyday Life University of Macau Ten Principles of Economics Principle 2 : Rational people think at the margin .
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