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“The Undercover Economist” is the chosen book for this assignment which will be reviewed critically and its ideas will be reflected or summarized. This book was written by Tim Harford which was published in the year 2007. Basically, the book involves a wide variety of issues regarding the higher prices being charged by the coffee shops, the reasons due to which poor countries are still poor and other complex economic issues. The author has demonstrated in-depth understanding about ll such basic economic issues which are being faced by the people and they do not get the answers of such issues. This assignment will reflect on the discussions that have been made by various people about the book and my personal opinions will also be shared about the book. Apart from this, certain limitations of the book will also be discussed, if found any.
The author has represented the first key idea i.e. the people rely entirely on an economic system to produce their favourite beverage as the price which is being paid by the people is linked with the entire system of the economy. The more scarce a resource is; the more it costs/ charged; but Tim is in against of this view as he believes that this statement is not always true. In the UK, some coffee shops do not charge high prices because of selling a rare kind of coffee; but the prices may get charged higher due to a variety of reasons such as the large space being occupied by them.
Many companies formulate different kinds of pricing strategies to influence people to pay higher prices as their ultimate goal is to earn higher profits by charging higher prices. Not all the people have the capability of paying higher prices; so companies adopt group-targeting strategies and influence people in the names of offering discounts or schemes. Though companies offer multiple versions of products; but still they discourage its customers to buy the cheaper ones (Barton, 2013).
Tim warns the customers to practice good consumer habits to saver their money and not getting fallen into the trap of paying higher prices. Through this idea, Tim further warns the people to not assume all the products as cheaper in the discount stores; instead a smart trick must be used where the people should not search for cheap stores but shop intelligently by going for the specific deals (Harford, 2013).
In this idea, Tim has demonstrated about the information gap which indicates the major problem of the market i.e. the market can get easily broke down when people tend to deal with limited information. In many cases, the buyers lack the knowledge or information about certain products; say used cars where the buyer do not know much about the used car and therefore, he does not charge the price. In this case, the market simply gets break down.
From this idea, the author explains about the free market theory which suggests that when all the individuals pursue their desires, then everyone will be able to get the benefits. The total costs of the products get increased when the taxes are said to be inclusive in those prices. The author explains through an example that if a buyer wants a car; then the market is supposed to provide the car with all the requirements as desired by the buyer at a fair price; but there are hidden social costs which are not included in the retail price (Barton, 2013).
The response to constituent demand and lack of democratic control is considered as economically unhealthy. The economy gets flounder when money of the country does not get invested in either infrastructure or any other constituents. The corruption results in an economic decline. To set up businesses, the managers need to pay bribes that lead to corrupt bureaucracy (Alves and Kvangraven, 2020).
The level of economic growth can be increased and become far more efficient while engaging in the international trade. The countries can take up to full advantage in the varied global market by opening up to the international trade. Tim reflected that it is not enough to trade in the international market; but it is equally important to focus on most refined skills and reaping the benefits of competitive advantage (Harford, 2013).
The students of various Universities have found this book really helpful as it has provided them with the in-depth knowledge and understanding of various economic ideas by using the analogies and comparisons that could help in resolving everyday economic issues. Many other authors have founded that Tim Harford has not only discussed economic theories in each chapter; but also given the clear answers to all the questions that are being asked by many people (Harford, 2013). The economic ideas have been greatly linked and made understood with respect to the current affairs.
According to the views of Cramp (2021) the people can learn a lot from this book by looking to the economic issues from the eyes of an economist and they can make better decisions in their day-to-day lives. This book would also enable the people to gain better understanding about why the societies behave in the way they do across the world. In the opinions of Schmeiser (2017) the book has further involved some suitable advices that can be taken by the people such as shopping cheaply and not at the cheap places and not buying anything out of ignorance. Also, Tim Harford has explained everything in simple terms by using real life examples of Starbucks and other coffee shops which has helped those people also to learn and understand from the book who do not possessed any previous knowledge about economics.
I personally feel that this book has opened my eyes about various activities that are being performed in the market and I have been able to recognize the unfair practices which are being undertaken by the business managers to increase their sales and profits and to attract higher numbers of customers. This book involved the detailed and simple explanation of the questions that run in the minds of thousands of customers; but none of them have ever tried to think about the answers. The relevant examples have helped me to gain in-depth understanding about different kinds of economic issues from the perspectives of economists. I found this book as a blessing because now I will be able to make suitable decisions while buying the products from the market at fair prices. Another thing which I have felt good about this book is that the author has not used difficult terms and concepts of economics; but used the simple language and real-life examples to make the readers properly understand about the economic concepts (Cramp (2021)).
The only drawback or limitation which has been observed in the book is in the chapter 2 as the story of “Crosstown Traffic” lacks the clarity. As compared to other examples given in the book, this particular story lacked the significant understanding. Though the entire book is easily understandable; but only chapter 2 seems to be understood by the economic students only (Alves and Kvangraven, 2020).
I liked the simple method of explaining which has been used by the author s I have found that many authors use technical terms and high vocabulary words while writing their books and I struggle in understanding the concepts written in the books. Even after containing the knowledge of economics, this book is easily understandable by the non-economists also. I feel that this book is highly valuable because it helps the readers and common people to make relevant buying decisions and not getting fooled by paying higher amount of prices for the products they buy. I would highly recommend this book to read to both economists and non-economists to make day-to-day decisions. Also, the people can have in-depth knowledge and information about the market and about the strategies that are adopted by the business organizations to charge higher prices from the customers in the name of discounts and other offers.
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