Question

• 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.
• 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.
• Minimum 175 words.

Answer 1

Monopoly sellers offer discounted prices to buyers who are willing to mail for a rebate or have endured some inconveniences. The demand for a monopoly curve is elastic. Therefore, with the discounts the monopoly seller can attract a greater number of consumers than what they could have without the rebate. Reducing the price of the product more number of buyers will buy the goods. This happens because the demand curve is elastic. Similarly, if a buyer faces inconvenience then he/she might not come to the seller for the second time. That is why the buyers facing inconveniences are given a discount, to attract them to come for the next time.

Traditional economic models are based on the traditions, customs and beliefs of a society. Traditional economic says to save money so that we can buy other goods and services. Moreover, te concept of more number of changing hands of money will bring more money to the economy, this concept was not there. Therefore, it was difficult to believe why waste money to lose weight when weight could be lost by changing our diet at home, which will not give rise to any expenditure.