Demand and Supply Curves for given Online Retailers Products
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Question
Some online retailers include free shipping while others charge for shipping. In July 2006, bajangles.com offered a Sony 60-inch rear projection TV for $2,968.99 with free shipping, while MBsuperstore offered the same TV for $ 2,692.95 with shipping charge of $299.50 to Alaska.
- Using relevant demand and supply curves, explain whether it matters for consumers if the retailer offers free shipping or charges for shipping.
- If consumers view bajangles.com and MBsuperstore as equivalent (in terms of quality of services), how should their prices for the same TV compare? Are the process consistent with your answer in (a)?
- If consumers are biased in decision-making by anchoring, how would that effect your answer in (a)?
Summary: This question belongs to economics and discusses about demand and supply of two online retailers and to explain whether it matters for consumers if the retailer offers free shipping or charges for shipping of products.
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