Most people understand the concept of supply and demand. Some people even understand the concept of elasticity of demand. Those who studied economics should know that a giffen good is a product that has a positive relationship between price and quantity demanded.
The classic example of a giffen good is an inferior quality staple food, whose demand is driven by poverty. eg When the price of rice rises in poor parts of Asia, those living hand to mouth actually have to buy more rice (and less superior food) for sustenance.
At the other end of the economic ladder, people would gladly purchase more of a Veblen product when the price goes up. In what can only be described as totally irrational, yuppies will pay a snob premium if it means they can ponce around flaunting their wealth. Women will look at a $2 moisturiser one week and think it's crap because of the price. The next week the store manager doubles the prices and it walks out the door.
But this entry isn't just an economics lesson. It's about the ugly side of capitalism and the youth of today.
Last weekend a teenager with an awsome grasp of the concept of elasticity of demand flogged off a single dinger to his desperate mate for a whopping $6.
Whatever happened to helping out a mate?
The dinger seller has looked into his mate's desperate eyes and said "gotcha". 1200 per cent mark up.
The dinger seller did have somewhat of a conscience. He could have demanded the contents of his mate's wallet and a $20 IOU and still made the sale.
Thursday, May 01, 2008
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1 comments:
No comment about the desperate guy who apparently does not understand what to do with price signals? (i.e. decline to purchase or find an alternate supplier or find an alternate product) Was he a consistent beggar who begged and begged but never had anything to share? Why had he not adequately stocked his dinger supply? Perhaps when he reflects on this bad experience with human behavior he will adjust his own behavior accordingly.
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