Essay - The Undercover Economist What I Learned from the Undercover Economist...

The Undercover Economist

***** I learned from The Undercover Economist

***** title of Tim Harford's work The Undercover ***** is somewhat m*****leading. Rather than a renegade view of the science of economics, the text instead purports to give a clear and rational explanation for the common, mundane yet seemingly irrational aspects of everyday economic life. It suggests that ordinary economic theory actually does have the explanation for such apparently inexplicable phenomena as the three-dollar lattes at Starbucks and the high price ***** poorly running used cars.

For example, take Chapter 2: "Wh***** Supermarkets Don't Want You to Know." Harford does not simply note ***** Starbucks is a chain store that has succeeded in marketing specialty coffee at high prices where consumers will pay extra for ambience ***** fancy names. Starbucks has a unique niche, th*****t of price-sensitive customers who equate a product's quality with its price in a positive f*****shion. While the conventional law ***** supply and demand suggests that the greater the *****, the less the demand, th***** is not always the case. Some consumers will buy in bulk when they see a discount, or even simply perceive ***** discount, while conversely other consumers will buy more because of a perception ***** *****er quality *****n by a cert*****in upscale brand name. Bargain stores are not always bargains, rather they draw bargain-seeking ***** consumers by offering deep discounts on some goods, although not on all goods.

Although ********** a higher price is reflective of ***** input costs, as ***** the c*****e ***** organic food, in o*****r instances the price also reflects the target market of ***** commodities, which ***** tends to be more affluent in ***** case of organic produce. This idea dem*****strates how even classical micro***** theory has incorporated such real world factors as differences in consumer psychology, into its methodology. Consumer demand ***** not always increase with lower prices; it depends upon the target consumer market ***** the good.

***** is ano*****r principle with multiple applications in the lives of everyday consumers. Everyone knows that if a good is scarce and desirable, a producer can charge more, and some goods are deliberately horded by *****s so they can charge higher prices, like 'Tickle Me Elmo' or other hot toys during the holiday season, ***** diamonds and gold on the precious metals commodity markets. But how does this scarcity principle translate ***** c*****ditions other than droughts and produce surpluses, or the pricing decisions ***** marketers in ***** general world economy? Take a local movie theater, ***** an artificially induced ***** of other ***** products allows the movie theater to charge more for popcorn ***** soda, or a b*****r or a restaur*****t to charge more for wine.

***** areas ***** high levels of tourist foot traffic, the principle of scarcity can also be induced, even though theoretically *****s could gravitate to other areas to eat. Because tourists don't know where to find good restaurants that are cheap, they tend to eat at the first place ***** ***** can ***** a