５th April,2005
Today is Mother's day.
The time now is 9:00.
Mrs. So and her daughter-Kate are
still waiting for a bus.
So it is not worth for us
to take by a taxi~
My dear, I know
Daughter,What
is sunk
it.But be patient.
The
buscost??
is coming soon.
Also, we have spent so
many time to wait for it,
so the forgone value of
time is cost for us!!
O~ My mum, don't
you know the forgone
value of time is a sunk
cost.
I think
we should
rather
by taxi
Mum,
we go
have
now.
waited
for Otherwise,
the bus
Let's
me
we Okay,
would
be late.
since
8:15am.
explain to you la!!
Historical Cost (sunk cost)
Definition: Original cost at which firm acquired a factor
Sunk
Pastoption
Cost
1.It does
not Cost
apply to=>
present
2.Past option are not presently available
Historical Cost (sunk cost)
Definition: Original cost at which firm acquired a factor
So
Sunk cost
Cost
After Mrs. So has listened to her daughter's explanation, they
decided to take a taxi to join their grandmother.
And when they leave the taxi, they meet Mrs. Lee and her son are
waiting in line.
In case, we don't need to
pay money is no cost for
us.too,
So, would you like to
Nice to meet you
also?
I wouldn't! I have date
Mrs. So.I am liningwaiting
for in lineOh,
Sure!!
Really??
my mum.
getting the free gift.
Why?? Thank you~
But I don't thinkHey~Mrs.
you don`tLee,
nicefortoit!
meet
you!
Yes!!
have any cost
What
Let'sare
meyou
explain
liningtofor??
you~
Opportunity cost
Definition: The highest valued option forgone
If Mrs. Lee don't wait in line at that time,
she can do other things, like doing
housework, doing revision with her son.
The
concept
free
= isMrs.
No
cost
So wenon-chosen
can of
conclude
that
And those
option
her cost
Lee isof
also
having
a cost of
waiting
in line.
wait in line, even if she no
need to pay money.
Dissipation of rent
Definition: The potential rent isn't captured in a partial
model in which private property rights are absent.
Also, queuing
Lee
Alllike
formMrs.
of non-price
competition
would lead
liketo…..
queuing, rationing, ballot,
first come, first serving, violence,
etc will rise the dissipation of rent.
In this case, Mrs. Lee queuing and
do not provide any potential rent to
society.
After Kate and her mum say goodbye to Mrs. Lee
and her son, they walk to the restaurant where her
grandmother is in there and wait for them.
But before they reached the restaurant, they walk
past the flower store. At this time, Kate have a
question and ask her mum.
Ooh~ sorry !!
It is because of the suddenly large
My dear, today is mother's day, you
ofexplain
demand.
Okay~ amount
Let's
to you
don't me
know??
more detail~
Mum, I know~
But
I mean
theprice
sellers
have to
Mum,
why why
do the
of flowers
set the
price higher
of flowers
so high
is much
today??
today than normal!!
Elasticity of demand
In special
Asday
theday
result:
In normal
Demand↑
D2
Price
↑ =sharply
Demand
= D1
Supply
unchanged
Supply
= S (inelastic)
Price
D1
S
D2
P1
Pe
Qe
Q1
Quantity
After having lunch with Kate's grandmother, they walk around in
the shopping mall.
Suddenly, Kate stop at front of a computer store and ask her mother
to buy a new printer.
P.S.
BB~
You
Have
seen
know~
thatof
Yes~
It don't
isuthe
case
Let's
there
issale
some
explain
tie-inme
ma!! to
proviso(附帶條件）？
you!!
If the buyer would like to buy the
printer at $300,
they must be also buy the scanner
at $5000.
But if the buyer want to buy only
the printer, then they have to pay
for it at $1000.
Oh~ I see.
Mum,
it is
It seem
Tie-in
thevery
scanner
sale?? is
cheap,
only
costit??
sold at
What's
a very
higher
$300~
price
in this case.
Tie-in sale
Definition: A pricing tactic that creates an artificial link
between the availability of two products.
In fact, it is the method for the
seller to concrete all consumer
surplus.
In the above case
The printer must buy with the scanner, so that
its price would be the lowest($300).
The End
Cheung Sui Ling
(4)
Lee Ka Man, Carman
(11)