![]() The second method is being used by criminals while selling drugs, by labor unions while negotiations with management etc. This strategy removes alternative options for the buyer. Producers stand to benefit form this situation as they can then charge even higher prices. Unnatural method – An intentional reduction in resource which leads to artificial scarcity. Natural method – Scarcity plays a role in driving rent of prime locations. He explains that there are 2 reasons for high rents 1. ![]() Also such places usually have only one coffee house and that is because that creates an artificial scarcity. ![]() Rush hour customers are ready to pay a higher price for that same coffee. He also explains that high cost of coffee at fine location is not arbitrary and is because of location difference. Similar observation can be made form the real estate prices of London. The rent of a superior land will always be the difference in yield of superior and inferior land. He introduces the concept of marginal decision making. He explains this simple idea with many examples like farm land prices, coffee prices and real estate. The Undercover Economist Chapter – 1 In 1st chapter Tim tries to put forward the idea that strength comes form scarcity.
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