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The Economic Concept of Couponing

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A television show called 'Extreme Couponning' features people who go to extreme lengths to collect and use discount coupons. Though the program focuses on extreme cases, couponning is a popular strategy used by businesses to generate sales. What key economic concepts underlie the use of discount coupons by businesses?

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Solution Summary

The solution identifies the economic concept that applies to couponing.

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The use of coupons to generate sales is based on the concept that coupons encourages the consumers to be attracted to a particular product and entice them to buy. A coupon gives the impression that the product has a reduced selling price.

The economic concept that applies here is the law of demand. This law of simply states that 'as the selling price of the product goes down, quantity demanded for that product goes up'.

Henderson (2008) said that "the most famous law in economics, and the one economists are most sure of, is the law of demand. On ...

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