Learn Before
Supermarket vs. Corner Shop
A consumer's choice between shopping at a supermarket or a local corner shop is guided by relative prices. If the prices for goods are significantly lower at the supermarket, this creates a strong economic incentive to shop there, assuming other factors like travel distance are manageable. The decision hinges on the comparison of prices between the two stores, not on the absolute price level of the goods.
0
1
Tags
Social Science
Empirical Science
Science
Economy
CORE Econ
The Economy 1.0 @ CORE Econ
Economics
Ch.2 User-centered design process - User Experience Design - Winter 23 @ UI Design in UI @ University of Michigan - Ann Arbor
UI Design in UI @ University of Michigan - Ann Arbor
User Experience Design - Winter 23 @ UI Design in UI @ University of Michigan - Ann Arbor
UI @ University of Michigan - Ann Arbor
User Experience Design @ UI Design in UI @ University of Michigan - Ann Arbor
University of Michigan - Ann Arbor
Ch.2 Technology and incentives - The Economy 2.0 Microeconomics @ CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
Introduction to Microeconomics Course
Related
Effect of Proportional Price Changes on Economic Decisions
Bakery Production Decision
A textile manufacturer is deciding between two production technologies. Technology A is labor-intensive, requiring many workers. Technology B is capital-intensive, requiring expensive machinery. The manufacturer is considering opening a factory in one of two regions with different input costs:
- Region 1: Average wage is $15 per hour; Machine cost is $60 per hour.
- Region 2: Average wage is $20 per hour; Machine cost is $100 per hour.
Based on a comparison of the input costs, in which region would the manufacturer have a stronger economic incentive to adopt the capital-intensive Technology B, and why?
A coffee shop owner currently pays baristas $15 per hour and an espresso machine costs $30 per hour to run (including maintenance and energy). A new city-wide minimum wage law increases barista pay to $20 per hour, while the machine's running cost remains unchanged. Assuming the owner's goal is to minimize production costs, this change in hourly costs provides a new economic reason for the owner to consider using more automated machinery relative to human labor.
Inflation and Purchasing Decisions
Commuting Decision Analysis
Match each economic scenario with the correct description of the change in relative prices and the resulting incentive.
A student's budget allows for spending on either coffee or bus fare. A cup of coffee costs $3 and a one-way bus ticket costs $1.50. To make a decision based on the trade-off, the student calculates that the cost of one cup of coffee is equivalent to ____ bus tickets.
A city government wants to reduce traffic congestion by encouraging commuters to switch from driving their personal cars to using public transportation. Currently, the average daily cost of driving is $10, and a public transport day pass costs $5. Which of the following policy changes would create the strongest economic incentive for a commuter to make this switch?
Harvesting Technology Adoption
A furniture manufacturer uses both skilled carpenters (labor) and automated cutting machines (capital) to produce chairs. Initially, the daily wage for a carpenter is $200 and the daily operational cost of a machine is $400. The government then introduces a subsidy that reduces the machine's daily operational cost to $200. Arrange the following steps in the logical order that describes how the manufacturer would economically reason about adjusting their production method in response to this change.
Supermarket vs. Corner Shop
Relative Prices and Technology Choice in the Industrial Revolution
Learn After
A consumer needs to buy a basket of goods including milk, bread, and eggs. The local corner shop is a 1-minute walk away, while a large supermarket is a 10-minute drive. The consumer observes that milk is slightly more expensive at the supermarket than at the corner shop. However, they still decide to make the trip to the supermarket to buy all their items. Which of the following provides the strongest economic justification for this choice?
Grocery Shopping Decision
If widespread inflation causes all grocery prices to increase by 10% at both a large supermarket and a local corner shop, the economic incentive for a consumer to travel to the supermarket for its comparatively lower prices will be weakened.
Consumer Choice and Price Changes
Consumer Choice and Price Changes
Analyzing Consumer Shopping Decisions
A consumer typically buys a weekly basket of groceries at a large supermarket for $100, saving $20 compared to the $120 price at their local corner shop. This week, the supermarket's price for the same basket rises to $115, while the corner shop's price remains $120. The consumer, considering the time and cost of travel to the supermarket, decides to buy from the corner shop instead. Which economic principle best explains this change in the consumer's decision?
A consumer is deciding where to buy their weekly groceries. They estimate the total cost of their grocery basket is $90 at the supermarket and $115 at the local corner shop. The round trip to the supermarket takes 30 minutes and costs $3 in gas, while walking to the corner shop takes 5 minutes with no gas cost. The consumer values their time at $12 per hour. To make the most economically rational choice, which analytical step should the consumer perform?
A consumer is considering a trip to a large supermarket instead of their local corner shop. Assume the time and cost of travel are the same for any trip. Evaluate the following two independent scenarios:
Scenario 1: The total cost for a basket of goods is $50 at the corner shop and $40 at the supermarket. Scenario 2: The total cost for a different basket of goods is $200 at the corner shop and $190 at the supermarket.
In which scenario is the economic incentive to travel to the supermarket stronger?
Calculating the True Cost of Groceries