• According to the video clip, Aldi sells only prepackaged products, 95 percent of which bear their own private brand labels. How does the law of demand apply to Aldi's private labeling of 95% of its products?
The quantity demanded for Aldi good rises as the price falls, with all other things staying the same. The all other things staying the same part is really important. These are other things that can affect demand besides price. They are: prices of related goods or services, income, tastes or preferences, and expectations. The Success of Aldi’s private label brands has been able to create better sales opportunities. The customization of Aldi’s store brand labels -- such as to logos and tag lines -- can personalize a customer's shopping experience that can lead to higher customer loyalty.
• What are some of the marginal benefits of shopping at Aldi?
Marginal benefit refers to what people are willing to give up in order obtaining one more unit of a good. Aldi shoppers have given up bags and baggers.
• What are some of the marginal costs of shopping at Aldi?
Marginal cost refers to the value of what is given up in order to produce that additional unit. The saving that Aldi gain from not paying for an inventory of paper or plastic shopping bags has to be a great benefit, additionally, not having a staff of baggers on the payroll.
• Who decides which is greater; the marginal costs or marginal benefits?
Consumers have to make choices as to what goods will be purchased or not purchased. Purchasing one item means that fewer funds are available to purchase other items. Economists believe that consumers make decisions at the margin; i.e. should one more unit of the good be obtained or not? The consumer will compare the additional (marginal) utility to be achieved by consuming one more unit of the good, to the additional (marginal) utility that must be given up (buying power) in order to obtain the good.
• If the marginal costs are greater than the benefits...