The world's funniest economics stories

Chapter 8 Milk Coke Economics--An Interesting Economic Phenomenon (1)
1. Women's clothes buttons are on the left, while men's are on the right--habit economy
Why do women button their shirts on the left and men on the right?If you are a person who is good at discovering, you must have noticed this problem long ago.Of course, if you're just realizing it now, you might as well look down at your clothes.Ladies' tops all button on the left, men's tops all button on the right.Why is this so?This also starts with the development history of men's and women's clothing.

In the 17th century, when the button first came out, buttons were only used on the coats of the rich.According to the custom at that time, men dressed themselves, while women were helped by servants.The buttons on the lady's shirt are nailed to the left, which greatly facilitates the servants who serve the hostess.The buttons of men's shirts are on the right, not only because most men wear their own clothes, but also because the sword hanging on the left waist is pulled out with the right hand, so it is not easy to be caught by the shirt...

Why do women's clothing still button on the left these days?It turns out that once a norm is established, it is difficult to change.Since all women's clothing buttons on the left, it is risky for a tailor to offer women's clothing that buttons on the right.As a result, habits have become "conventions" that people are unwilling to change.

Women's clothes buttons are on the left, but men's clothes buttons are on the right; when you open the refrigerator, the freezer will light up, but the freezer will not light up; laptops can operate under any country's power supply standards, but most other electrical appliances cannot; Soda cans cannot be made shorter and fatter... If you observe carefully, everyone will find many things that are in the habitual state in our lives.

Therefore, when we see something that has changed slightly, we will be surprised and take a while to adapt to the change of the new thing.Over time, this attitude and approach seems to have become our consistent principle in dealing with unconventional things.

Why is this so?Why is our thinking like this in the reflection of life?This involves the concept of "habit economy".

Habitual economy refers to a habitual attitude towards things or things formed unconsciously by people over a period of time in daily life, as well as the degree of acceptance of these things and their impact on economic activities such as commodity production and trading.Because people need certain conditions and time to accept non-habitual things.

Therefore, in order to ensure their own economic benefits within a certain range, producers in economic activities must consider the habits of people as consumers in product production.Once the products provided to consumers are contrary to their daily habits, it is necessary to use a method that consumers can accept and gradually adapt to, so that consumers can get used to the new product model.

In real life, understanding the concept of customary economy can ensure the coordination relationship between product supply and demand to a certain extent.For example, in the previous story, since the appearance of buttons in the 17th century, the buttons of women's jackets are on the left side, and the buttons of men's jackets are on the right side. Or not used to being changed.

Therefore, as clothing manufacturers, they prefer to produce clothing patterns that are generally recognized by the public.Perhaps the unconventional change of the button position can add more innovative elements to the garments it produces, but the manufacturer understands that the mass market is the most important thing to ensure its economic benefits.

Similarly, grasping the habitual psychology of people when buying goods is also one of the important means of making profits.In front of the skin care products or cosmetics counters, many product promoters will catch many women who want to try the products in advance before buying them to feel the effect of the products, and prepare trial products specially for customers.As a result, many products are accepted by customers after trials.

Similarly, there are activities such as food tasting in supermarkets and trial games in entertainment clubs. The starting point is all derived from the consideration of customary economy.

The full name of "Flow A" is Influenza A H1N1 Influenza.Influenza A had a huge impact on the world public health and epidemic prevention system in 2009.The emergence of this virus has caused people to act crazy. Regardless of food and clothing, as long as it is related to the anti-A virus, it has been "stirred" by people without exception, so people put this crazy The behavior is dubbed "A stream economy".

2. Milk is packed in a square box, but Coke is packed in a round bottle - fixed cost
If you often go to the supermarket, if you are careful enough, you will notice a very interesting phenomenon: almost all soft drinks, whether in glass bottles or aluminum cans, have cylindrical bottles, but milk seems to be cylindrical. Packed in a square box.Why is milk packed in a square box, while other beverages, such as Coke, are packed in round bottles?

According to someone's analysis, soft drinks such as cola and liquid products such as soy sauce and beer are not easy to be damaged in round bottles, because the internal pressure of the bottle is small, and it is not easy to deform compared with the square container, so it has been used.The milk that needs to be kept fresh can not be stored for a long time if it is stored in a round bottle. Generally, it will deteriorate in a day or two, at most a week, which brings great inconvenience to people.Later, in order to prolong the preservation period of milk, a new packaging method - Tetra Pak was produced, which solved the problem of storing milk at once, and thus was widely used.

It is also said that in a survey, consumers generally believe that soft drinks such as cola, which are directly consumed, are stored in cylindrical containers, which are more comfortable to use and easy to carry, while milk, etc. will not be used directly by people. For drinking, most of the beverages that are poured into cups do not need to be placed in round bottles.

Milk is packed in a round box, but Coke is served in a round bottle.In view of this phenomenon, whether it is analyzed from the characteristics of circular containers and square containers, or from the perspective of consumer acceptance and recognition, the above-mentioned people's arguments are very reasonable.However, if we conduct some in-depth analysis from the perspective of economics, our perspective will be much broader.

Fixed costs, also known as fixed expenses, are relative to variable costs, which refer to costs that can remain constant without being affected by changes in business volume within a certain period of time and within a certain range of business volume.It is characterized in that its total amount remains unchanged within a certain time range and business volume range, but, relative to the unit business volume, the fixed cost shared by the unit business volume and the increase or decrease of the business volume change inversely .Generally, a distinction can be made between binding fixed costs and discretionary fixed costs.

The total amount of fixed costs is fixed only within a certain period of time and within a certain range of business volume, which means that the fixed cost of fixed costs is conditional.The certain range mentioned here is called the relevant range.If the change in business volume exceeds this range, the fixed cost will change.

When choosing what kind of container to hold cola or milk, a producer or an enterprise needs to consider not only the convenience of use, but also whether it conforms to the principle of cost-effectiveness to a certain extent.

When we take the elevator in different office buildings, we often find that some elevator manufacturers will create ideas in Braille on the elevator buttons for the blind.The reason why manufacturers do this is because the cost of producing this kind of elevator is far greater than its reasonable expected benefits.

This example shows that, in general, unless the product value brought by adding new functions to the product, that is, the benefits are greater than the cost, the manufacturer does not have the motivation to add new functions to the product.

In almost all instances, product design must incorporate features that best suit consumers, while satisfying sellers' needs to keep prices low and competitive.That said, product design must strike a balance between the two.

Based on this, we explain from an economic point of view why the shapes of milk and cola bottles are different.Generally, the round shape is considered to be a more scientific, material-saving, easy-to-manufacture and less-damaged packaging.

Therefore, putting soft drinks such as cola in a round bottle can save the manufacturer a lot of fixed costs while increasing more revenue.In the same way, using square bottles to hold milk and other liquids that need to be kept fresh can alleviate the trouble and loss caused by improper fresh-keeping treatment for manufacturers, and it is also a way to reduce their fixed costs.

In addition, in supermarkets, soft drinks in round bottles are mostly placed on cheap open shelves, so their operating costs are almost zero.However, drinks that need to be kept fresh, such as milk, need to be placed in a special freezer to keep them refrigerated.In this way, the operating cost of milk will be high.The square bottle design is just right to save space in the freezer or refrigerator.The occupied space is small, and the quantity that can be placed at the same time will increase, which reduces the operating cost to a certain extent.In this way, whether it is a round bottle or a square bottle, as long as it is used properly, it will be very reasonable.

It can be seen that, on the issue of whether to use square bottles or round bottles, manufacturers will consider cost savings and provide convenience and benefits to consumers very well.In this way, beverage manufacturers have obtained the maximum benefit with less investment in fixed costs.

Strategic cost management is mainly to dig out the hidden costs of the enterprise, integrate the analysis and utilization of cost information into strategic management, provide strategic cost information for each key step, and obtain cost advantages from beginning to end, thereby forming the competitive advantage of the enterprise and improving the core value. Competitiveness, ahead of rivals.Strategic cost management emphasizes knowing oneself and the enemy, revealing the relative cost position of the enterprise compared with competitors, and seeking ways to continuously reduce costs.It can also be said that it is the cost management for obtaining and maintaining the enterprise's lasting competitive advantage.

The main purpose of strategic management for enterprises is to obtain the two keys of growth and return in sustainable development.That is the so-called "seeking benefits from management".As an important part of strategic management, strategic cost management has replaced traditional cost management and has become a powerful weapon for enterprises to strengthen cost management and gain competitive advantage.

3. Why do some restaurants provide free refills for drinks-marginal cost
Mr. Wang opened a Chinese restaurant near the commercial street in the city center. Because it is in a downtown area, there are a lot of pedestrians coming and going, and many people are willing to eat here.However, because there are already several restaurants around the restaurant that have lasted for half a year to compete together, the business of Mr. Wang's restaurant is not booming, but it is still passable.

In order to increase the passenger flow, Mr. Wang has tried his best.In the beginning, in order to attract customers, Mr. Wang kept asking the chef to change the style of the dishes to meet the different needs of different customers.

In addition, he has also engaged in many activities, such as customers who spend 50 yuan at a time can reduce a few yuan, and he wants to use these methods to make his business flourish.But these methods can play a certain role in a short period of time. After a long time, customers get tired of it, and the business will gradually fade.This approach did not work.

Later, he came up with an idea: he realized that drinks and rice or soup in most restaurants cannot be added for free. If this tradition is changed, customers can be refilled or added for free. Rice, soup and other food, then the customer feels patronized and will definitely visit his restaurant again.

The cost of things like drinks and rice is not high. If such a low cost is invested in exchange for a high cost such as turnover, it can be regarded as a gain.

So Mr. Wang adopted this method and posted banners such as "free refills, free additional rice" and other banners at the door, which aroused a large-scale response. Many customers rushed into his restaurant to eat when they saw his banners. At that time, the restaurant became popular, and many store owners imitated his approach.

The above story involves a very common term in economics - "marginal cost".

Marginal cost refers to the increase in total cost per unit of additional produced [or purchased] unit.This concept states that the cost per unit of product is related to the total product volume.

For example, the cost of producing just one car is enormous, while the cost of producing the 101st is much lower, and the cost of producing the 10000th is even lower [because of economies of scale].

However, considering opportunity cost, marginal cost may increase as production volume increases.Still in this example, when producing a new car, the materials used may have better uses, so we should try our best to use the least material to produce the most cars, so as to increase the marginal income.

Let's analyze the case of Mr. Wang opening a restaurant in detail to see how the economic knowledge of "marginal cost" is reflected in it.If there are two restaurants with the same characteristics, one has a "free refill" banner outside the door, while the other has nothing posted, I believe that most customers will still eat at the restaurant with the banner.Diners who enjoyed free refills at the restaurant felt they had gotten a good deal.As word of mouth spreads, the restaurant will soon find itself with far more customers than before.

(End of this chapter)