EC102
Pardon the emo post, was kind of stressed up over certain matters here. Anyways, EC102 is the title of the economics module that we have to take in our first year. It's my first time being exposed to the complexity of the subject. The lecturers were pretty good/boring at times. But overall I think I kind of like the subject. Mainly because it deals with the happenings today, about transactions, monopoly, competition, profit and all those.
Not bad right? Haha - Then we have the consumer surplus and the producer surplus. Basically more consumer surplus is good for the consumers and more producer surplus is better for the producer. This is shown in the graph below -
Red - Consumer surplus
Blue - Producer surplus
So what do they do? The solution is through price discrimination. In a specific case, we have what they (the lecturers) told me what it's known as the Hurdle Model. The concept is simple, if you are willing (or really cheap/want to save money/kedekut) to jump the hurdle, then you will get a cheaper price. If not, you pay more.
So if you're willing to jump the hurdle you get to pay price A and if not you only get to pay price B.
And so the consumer surplus would look something like this. And it is one of the ways they try to maximise profit and still look charitable.
Another one would be the cinema. Think TGV and GSC. They charge different price for the tickets and this is also a form of price discrimination. So whenever you see the senior citizens and students getting much cheaper tickets, someone at the top would be smiling and grinning with all the extra profits coming in compared to if only one price tickets were sold. They look so nice and charitable but its just another way to squeeze more money out of your pockets. Sigh... or maybe they're really just nice people la. Haha - Anyways, a lot of blockbuster movies are coming out in the summer and I'll still go to the cinemas to enjoy it.
More importantly, I learnt about monopolist. They actually give out cheaper prices to people for their own benefits! Omg, at first I thought it was a gesture of a charitable intention but Noo - it was/could be for their own sick twisted self interest. WOW 0.O
How can it be this way you ask? Let us now take a look at a simple supply and demand curve.
Supply curve : the curve that shows the price to make different quantities of goods.
Demand curve : the curve that shows the price in which the amount of consumers would pay.
Not bad right? Haha - Then we have the consumer surplus and the producer surplus. Basically more consumer surplus is good for the consumers and more producer surplus is better for the producer. This is shown in the graph below -
Red - Consumer surplus
Blue - Producer surplus
Mainly the monopolist wants to minimise the consumer surplus and thus by doing so maximise their profit even more. The only way they do that is through price discrimination. (for those who have absolutely no clue to as what on earth freaking price discrimination means, it just means they charge different prices to people)
If they charge it at price A, the consumer surplus is high and they won't want that at all. But if they were to charge it at a higher price to lower consumer surplus, then less people would buy their product. This is shown below. (PS - we must show EVERYTHING in graphs, its like economist live their lives in graphs. ugh)
So what do they do? The solution is through price discrimination. In a specific case, we have what they (the lecturers) told me what it's known as the Hurdle Model. The concept is simple, if you are willing (or really cheap/want to save money/kedekut) to jump the hurdle, then you will get a cheaper price. If not, you pay more.
So if you're willing to jump the hurdle you get to pay price A and if not you only get to pay price B.
And so the consumer surplus would look something like this. And it is one of the ways they try to maximise profit and still look charitable.
A really good example of this? Sophie Kinsella's funny book "Shopaholics and baby". When it first came out, all the books were in hard cover and not paper back. Hard cover cost about 18 pounds while the paperback would only cost about 8 pounds. The hurdle here is the wait for several months before the paperback edition came out. If you were not willing to jump the hurdle (I for one was not willing to jump it at all, I really liked the book) then you'd pay the 18 pounds. This way, they managed to maximise profits.
Another one would be the cinema. Think TGV and GSC. They charge different price for the tickets and this is also a form of price discrimination. So whenever you see the senior citizens and students getting much cheaper tickets, someone at the top would be smiling and grinning with all the extra profits coming in compared to if only one price tickets were sold. They look so nice and charitable but its just another way to squeeze more money out of your pockets. Sigh... or maybe they're really just nice people la. Haha - Anyways, a lot of blockbuster movies are coming out in the summer and I'll still go to the cinemas to enjoy it.
Looking forward to it...
Labels: Education
Names (from left to right) : ... too many people dy, lazy to type (try to guess the bottles we were drinking that night.. hehe)
