Saturday, January 24, 2015
Maggie Chamberlain, Chapter 1, Question #7
This chapter demonstrated the idea that we all act to maximize our utility. This idea was very illuminating as I started to see the reality of the matter. We all try to act in ways that will benefit us the most, whether it be psychologically, socially, financially, etc. One especially eye-opening example was that of plane ticket prices. I had never thought that airline companies could price their tickets differently for potentially the two people sitting right next to each other. But, the point that was made by this example, as well as the one with the differently-priced arthritis medications for Al Gore's mother and dog, was that certain people are charged more if they are more willing or able to pay. Of course Al Gore's mother is going to want arthritis medication for herself before she gets any for the dog, so her medication is going to cost more because she is more willing to pay for it, whereas getting medication for her dog would just be a bonus. So, people are going to be charged more for what they are most willing to pay for, and if the price is lower for the dog's medication the owner might be tempted to say "why not?" to a bonus medication too. In conclusion, this chapter opened my eyes to the reality of just how self-interested people are and how we're all just trying to maximize our utility.
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I agree that this part was interesting and I never really thought about it like that before. I just thought the ticket prices went up because it was last minute and the tickets would be worth more if the plane is full so the price can go up. I didn't really think it was aimed at the business people who would be required to pay whatever the price is because they need to go out of town.
ReplyDeleteYes. Realizing that each vendor or company or sales associate alters their prices according to the buyer, or what they think is more valuable to the customer rather than how much the product is actually worth kind of a sad thought... I mean, by elevating those prices, the sellers are technically withholding products from those who cannot afford it at that price, even if they may be able to afford it at face value. It's like cancer and some new drugs that have been tested, yet cannot be used or even talked about because hospitals cannot make money, because the drugs or methods cannot be patented. Maybe that was a drastic example. But the point remains.
ReplyDeleteI also found the information about the airline tickets to be interesting. It is really a smaller version of what takes place every day in the free market. Different vendors and firms are fighting each other for the consumers business and consumption of their products.
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