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Watch this short video. Think about how this pandemic drives the demand and supply curve shift for each product. Give me 1 to 2 product as examples to describe the following: What happened to consumer behavior on this product during the pandemic? What causes demand or supply curve shift? If shift, to which direction?

View and analyze "The Coupon Kid | Extreme Couponing." According to Broderick, all the items in his storage are worth approximately $4,500, but he only spent about $100. How would an economist respond to this? Are there any economic concepts that can be applied to this scenario?

Sample Paper For Above instruction

During the COVID-19 pandemic, consumer behavior and market dynamics underwent significant changes, notably affecting demand and supply curves for various products. By examining specific examples such as household cleaning supplies and personal protective equipment (PPE), we can understand how these shifts occurred and what factors influenced them.

Impact on Consumer Behavior and Market Dynamics

One prominent example is the increased demand for disinfectants, hand sanitizers, and disposable masks during the pandemic. Typically, these products had a stable demand, but the health crisis heightened consumer awareness of hygiene, leading to a surge in their purchase. The behavior of consumers shifted from occasional use to prioritizing these items for daily safety, which significantly increased the demand curve for these products.

The shift in consumer behavior was driven by multiple factors, including fear of infection, government mandates, and heightened media coverage emphasizing hygiene practices. As a result, consumers were willing to pay higher prices and buy larger quantities, causing the demand curve to shift rightward (increase). This increase in demand was sudden and substantial, reflecting the urgency and importance attributed to hygiene during the pandemic.

Demand Curve Shift: Causes and Direction

The primary causes of this shift include a change in consumer preferences favoring hygiene-related products and a broader perception of risk associated with respiratory illnesses. The demand curve for disinfectants and PPE shifted outward (to the right) due to increased consumer willingness and ability to purchase these items at various price points. Conversely, supply chains faced disruptions, which sometimes resulted in supply shortages and further escalated prices.

The supply curve for these products often shifted inward (to the left) during the pandemic because of manufacturing constraints, transportation problems, and raw material shortages. However, in some cases, suppliers increased production when possible, trying to meet the rising demand, causing the supply curve to shift outward. These combined shifts led to high market prices and stock shortages in many regions globally.

Analysis of "The Coupon Kid | Extreme Couponing"

Broderick’s story exemplifies how economic principles such as the concepts of value, market efficiency, and consumer surplus can be illustrated through practical scenarios. An economist would analyze this as an example of extreme couponing, where a consumer uses coupons and discounts to maximize savings and essentially acquire goods at a fraction of their retail value.

From an economic perspective, Broderick’s ability to purchase items worth approximately $4,500 for only $100 reveals a significant consumer surplus — the difference between what consumers value goods and what they actually pay. This demonstrates how strategic coupon use can distort traditional retail pricing and challenge the assumptions of standard supply and demand models that assume equilibrium pricing.

Economic Concepts in Play

  • Consumer Surplus: Broderick gains substantial consumer surplus, as he values the items more than the amount paid.
  • Market Efficiency: The scenario raises questions about market efficiency, as coupons can create disparities between market value and retail prices.
  • Price Discrimination: Coupons serve as a form of price discrimination, allowing retailers to segment the market and attract different groups of consumers based on their willingness to pay.
  • Incentives: Couponing incentivizes consumers to purchase more and can influence market demand patterns.
  • Supply and Demand Externalities: Extreme couponing can lead to supply shortages if many consumers stockpile goods, potentially impacting market equilibrium.

    Conclusion

    In summary, the pandemic caused significant shifts in demand and supply for essential and hygiene products, driven by consumer behavior changes and supply chain disruptions. Similarly, Broderick’s extreme couponing highlights fundamental economic principles such as consumer surplus, market efficiency, and price discrimination. Understanding these concepts helps explain individual behaviors and market outcomes during unusual times, such as during global health crises or strategic couponing activities.

    References

    • Mankiw, N. G. (2021). Principles of Economics. Cengage Learning.
    • Krugman, P., & Wells, R. (2018). Economics. Worth Publishers.
    • Case, K. E., Fair, R. C., & Oster, S. M. (2019). Principles of Economics. Pearson.
    • Samuelson, W., & Nordhaus, W. (2010). Economics. McGraw-Hill Education.
    • Varian, H. R. (2014). Intermediate Microeconomics: A Modern Approach. W.W. Norton & Company.
    • Blinder, A. S. (2004). Microeconomics: Principles and Policy. South-Western College Pub.
    • Goolsbee, A., & Klenow, P. (2006). Evidence on Learning and Network Effects in the Diffusion of New Products. American Economic Review.
    • Levitt, S. D., & Dubner, S. J. (2005). Freakonomics. HarperCollins.
    • Rothbard, M. N. (2011). Economics of Zero Price. Ludwig von Mises Institute.
    • Shapiro, C., & Varian, H. R. (1999). Information Rules: A Strategic Guide to the Network Economy. Harvard Business Review Press.

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