consumer surplus

1 Oct

london 6.39pm 12.2C

this concept seems to be the thing occupying some brainy minds.

all because levitt, has been playing with the statistics that uber has been generating with its pricing according to demand. so it can find out how much users want to pay for the service and even how much they dont. like an auction really. that is what i would call it. u can argue that each time a user opens the app, they are participating in an auction, not in goods, but in service. he calls it showing a demand curve. haha.

 i wonder if he were to use the data from an auction house, the bidding data … whether that might not illustrate a demand curve. though in an auction there is a subtle influence, competition between bidders. whilst in uber there is no perceived competition, it is just each person’s wants at that moment in time… so maybe auction is not quite the right term for the uber pricing. or call it an auction without the egos coming in to play. haha. 

Okay, let’s. Let’s say you go to the grocery store or the farmer’s market to buy some apples. You happen to want four apples, and you’d be willing to pay $1 each. Four dollars total. But the apples only cost 50 cents each. So the four apples cost you $2 instead of $4. The $2 that you saved from what you would have been willing to pay? That is consumer surplus.

Why Uber Is an Economist’s Dream

it kind of remind me of the pricing the supermarkets use with end of date goods that they sell off at the end of the day. in the bargain shelves. they gradually reduce their prices, but not in regular decrease… they make small reductions early in the day and then near the end of the day they make a sudden drop… i wonder if they are using some kind of research data to determine what makes people buy. it does remind me of the eg they gave about pricing during a time of an impeding storm. sale of flashlights and batteries… the law prevents shopowners from raising the price, but if it did, it might follow the pattern of the reduced price bargain bins, but in the opposite direction. price rising higher and higher at first then falling…. prevents hoarders.

similar to the bargain prices, prices start high, wiht little reductions; prevent a guy coming along and just sweep all the goods off the shelves if u drop the price to so low at the beginning of the day, so that there is none left to sell by the days end. 

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