The book I have chosen for my report is The Undercover Economist by Tim Harford. Unlike a textbook, the Undercover Economist explains economics in a way that it easy to relate to and easy to understand. The Undercover Economist provides a logical explanation of the world’s economy by expressing his views of the world’s economic system. The author uses real life situations and examples to explain how economics around the world affect our lives.
The book I have chosen The Undercover Economist by Tim Harford explains economics by relating them to situations from our daily lives. The book is used to explain how supply and demand affects the market, prices of products, where we live and what we buy. Tim Harford also expresses his personal opinions of what should be done to improve the world.
The first few chapters explain how supply and demand affects the prices of the products that we buy. The book explains that the prices for products are set by the consumer and are not based off of manufacturing costs. Scarcity is what sets the price of products. For example on page 10, “Rush-hour customers are so desperate for caffeine and in such a hurry that they are practically price-blind. The willingness to pay top dollar for convenient coffee sets the high rent, and not the other way around.”
Businesses use a strategy to determine how much the consumer is willing to pay for a product. To accomplish this businesses offer multiple products that may seem in many ways different but are more or less the same basic product. This pricing strategy shows that consumers set the prices of goods by choosing which products they buy.
Prices are considered relative to the individual, the expression expensive varies from person to person. Eac...
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..., adding more busses, improving the subway system or even adding bike lines to roads. These positive externalities could make driving less attractive. The government in many ways has the power to improve the quality of life for its people.
After reading The Undercover Economist I found that the author Tim Harford does a wonderful job at relating economics to everyday life. I felt that the most important term in the book was scarcity. Scarcity could have been easily described as supply and demand. Being that the author is a British writer, he often relates the story to Britain using the British money system and naming locations. Overall the book was easy to understand. Unlike a textbook it provided examples that I could relate back to my life. I would definitely recommend The Undercover Economist to others who want to learn how economics affects our lives.
A couple of Squares has a limited capacity for which to produce their products and smaller companies tend to have larger fixed costs than bigger companies. Therefore, A Couple of Squares must maximize profits in order to ensure that they will stay in business. A profit-oriented pricing objective is also useful because of A Couple of Squares’ increased sales goals. A Couple of Squares increased their sales goals due to recent financial troubles. Maximizing profits is the easiest way to meet these sales goals due to the fact that A Couple of Squares has limited production capacity. The last key consideration favors a profit-oriented pricing objective because A Couple of Squares offers a specialty product. A specialty product often has limited competition, therefore can be priced on customer value. Pricing at customer value will maximize profits as well as customer satisfaction. A Couple of Squares’ lack of production capacity, increased sales goals, and specialty product favor a profit-oriented pricing
Brue, S. L., Flynn, S. M., & McConnell, C. R. (2011).Economics principles, problems and policies. (19 ed.). New
Jobs, Charles. "Peakonomics: toward a case typology for increasing undergraduate economics literacy and concept retention." Journal of Economics and Economic Education Research 9.1 (2008): 19+.General OneFile. Web. 17 Feb. 2014.
As we learned from Chapter 12, price must be carefully determined and match with firm’s product, distribution, and communication strategies. (Hutt & Speh, 2012, p. 300) Therefore, there should be a strong market perspective in pricing. In order to build an effective pricing policy, marketers should focus on the value a customer places on a product or service. One of the most effective ways to do so is differentiating through value creation.
Levitt, Steven D., and Stephen J. Dubner. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York: Penguin Books Ltd, 2006. Print.
It is determined by the cost of production, the segment aimed, the capability of the market to recompense, supply and demand, and all other direct and indirect factors. There are more than a few kinds of pricing strategies, each corresponded with the total business plan (Yoo, Donthu et al. 2000). Pricing could also be used to discriminate different brands of product, and to enhance the appearance of a particular company (Kotler and Levy 1969). In this case, Amazon is quite competitive in term of its prices, and has strategic approaches of staying up front of its market competitors (Chevalier and Goolsbee 2003). For instance, when a person is considering to purchase a particular book, Amazon has options whether that individual would prefer a new copy or a used one, and it also presents the prices for these books together with their conditions. A further proposal is to pay to create a premium account, where the items purchased would be delivered quicker. Amazon’s competitive prices also results from the minimum number yet well skilled employees, thus the customers are actually benefitting from the reduced cost of overheads, hence, the low prices of Amazon
The Kenneth. Economics in Perspective: A Critical History. Boston: Houghton Mifflin Company, 1987. Weatherford, Jack. A.
Economics is the study of how best to allocate scarce resources throughout an entire market. Economics affect our lives on a daily basis, whether it is on a business level or a personal level.
Pricing is an important aspect of every business. Chief Financial Officer’s (CFO) use pricing to create financial projections, establish a break-even point, and calculate profit and loss margins (Power Point, 2005). It is the only element in the marketing mix that produces revenue. Price is also one of the most flexible elements of the marketing mix as it can be changed very quickly. This is usually done to beat competitor prices in an attempt to fix the product’s market value position very low (Anderson & Bailey, 1998). After all, high prices make it difficult to become the market share leader. The leading US retailer, Wal-Mart, is an expert at low product pricing as evident in 2004 with $250 billion dollars in sales to their 138 million weekly shoppers. However, they are also responsible for reducing prices so low that it drives specialty stores out of business. This is the effect Wal-mart has had on many toy stores and has almost closed the doors of the famous toy store Toys “R” Us Inc.
The crucial importance and relevance of economics related disciplines to the modern world have led me to want to pursue the study of these social sciences at a higher level. My study of Economics has shown me the fundamental part it plays in our lives and I would like to approach it with an open mind - interested but not yet fully informed.
Sullivan, A., & Steven M., (2003). Economics: Principles in action. Upper Saddle River, New Jersey : Pearson Prentice Hal
Tragakes, E. (2012). Economics for the IB diploma (2nd ed.). Cambridge, UK: Cambridge University Press.
Price is the values entirety that consumers trade for the advantages of having or utilizing the product or services. Different places and cultural have different spending culture. Therefore the price has to be relevant according to the product offer because it can reflect the image of a
In today's world, economics associated disciplines are of fundamental significance and application and this has encouraged me to pursue a degree in Economics. Economics has an important relevance in all of our lives. As consumers we try to make the best of our limited incomes. As workers we take our place in the job market. As citizens of a country our lives are affected by the decisions of our government: decisions over taxes, decisions over spending on health and education, decisions on interest rates, decisions that affect unemployment, inflation and growth. As dwellers on the planet Earth we are affected by the economic decisions of each other: the air we breathe, the water we drink and the environment we leave for future generations are all affected by the economic decisions taken by the human race. It is these stimulating issues that excite me about economics. I enjoy studying Economics enormously and believe my passionate interest in economics is continually strengthened by my regular reading of 'The Economist'
Sloman, J & Wride, A (2012). Principles of Economics. 8th ed. Essex: Pearson Education Limited.