Canteenomics: Understanding the economics behind school canteen

Every school student knows the satisfaction and pleasure one feels when the lunch break bell rings. Some of us, like good children would open and eat our homemade food, while others would rush towards the canteen to devour the crispy samosas and flaky pastries. But have you ever wondered why the samosas get sold out so quickly, while the fruit salad sits on the counter all day? Here in this blog, I will answer all your questions regarding this and will explain you what goes on behind the counter. Demand

Demand means how many people want to buy a particular item.

This demand is influenced by a variety of factors-

• The student's personal choices. E.g., A student who likes sweets will prefer a pastry more than a samosa.

• Affordability- E.g., if the pastry is priced at a very high price, then many students may not buy it due to budget constraints.

• Social Factors - If many children buy a particular item, you may also be attracted to buy that item. Similarly, if a child says that the pastry tastes bad or is rotten, you may not feel the urge to buy it.

However, sometimes you might purchase a product due to impulse buying or anchoring

Impulse Buying

You came for a pastry, but the smell of the French fries tempted you, and you bought them. Such an unplanned and sudden decision is called impulse buying.

Anchoring

A Rs 100 pastry makes Rs 40 Maggi feel like a bargain, even though Rs 40 for a Maggi is too much. These strategies trick your brain into buying something which earlier wasn't in the plan..

Supply

• Supply means how many items the canteen can prepare and offer.

• The canteen every day has to estimate its number of customers and the potential items that will be sold the least and most.

• It then has to prepare such an amount of these items so that it can meet the demand of its customers, while at the same time avoid any wastage.

Pricing

The Pricing is too influenced by many factors, like-

• Cost of the ingredients

  E.g. cheese toast costs more than boiled or mashed potatoes, because cheese is costlier than potatoes.

• Effort, time and labour required to prepare the item

  E.g. - A pastry is costlier than Maggi as it takes a lot of effort to prepare.

• Shelf life, etc.

E.g. - Biscuits are cheaper than bread due to their longer shelf life.

Opportunity Cost

Now, the question that one may ask is how one decides what to buy. This is where the role of opportunity cost comes into play.

Opportunity cost is the cost of the next best alternative foregone.

To understand this, let us take an example. If you have Rs 20 with you and have two options, either to purchase a chocolate for Rs 20 or 2 samosas for Rs 20. Here, if you choose the samosas, then your opportunity cost will be the chocolate, and vice versa. Here, you think which option gives more value or satisfaction (which in terms of economics is called utility).

Monopoly

Monopoly means that one seller controls the entire market.

Canteens can be considered as a monopoly, as most schools have a single canteen . This means that if the canteen raises its prices by a small margin , then the students will continue to but its items , due to the absence of competition.

However, if some students start bringing food from home, this gives the students more choices and may even reduce the canteen demand. Conclusion

Thus, economics is not only present in textbooks, but also in our everyday life. The next time you visit the canteen, make sure to notice these small and intricate details!!